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UNITED STATES OF AMERICA. 



THE 



LABOR-VALUE FALLACY. 



By MfL. SCUDDER, Jr 

AUTHOR OF "CONGESTED PRICES," ETC. 




CHICAGO: 

JANSEN, McCLURG, & COMPANY. 
1884. 



H63o 

•S4 



Copyright 
By JANSEN, McCLURG, & CO., 

1884. 



K. R. DONNELLEY & SONS, THE LAKESIDE PRESS, PRINTERS. 



INTRODUCTION. 



No one can regard with absolute indifference the 
fierce discussions concerning social relations which 
are now agitating Europe and America. Every 
inhabitant of these continents has something at stake 
upon the outcome of these discussions ; and it is 
very important that sincere men should be able to 
take a clear and confident stand in these disputes. 

I have observed that a large proportion of men, 
who are beyond question intelligent and sincere, are 
far from confident in reference to socialism. On the 
contrary, I have found many benevolent, well- 
informed men in avowed sympathy with socialism. 
It is not uncommon to hear a good word for social- 
ism spoken by careful and conservative citizens, and 
not infrequently I have heard socialist arguments put 
by, as impracticable, solely on the ground that man- 
kind never can expect to reach perfection. 

For a long time I was befogged and perplexed 
by socialist reasoning. The arguments seem un- 
answerable, when their theory alone is considered ; 
but their application to practical affairs involves so 



The Labor - Value Fallacy. 



much that is unfair and unjust, so much that is 
destructive of the noblest qualities of individual 
character, and the most prized influences of social 
life that their adoption seems a dreadful possibility. 
It seems that in order to follow a correct theory, 
one must engage in a cruel crusade against the 
cherished institutions of modern civilization. The 
choice is a hard one ; and yet, I believe, that there 
are thousands in whose minds, this question has 
taken this form. I believe that there are many 
thousands of well-meaning, order-loving people, who, 
affected by socialist reasoning and the current teach- 
ing of political economy, entertain more or less well 
defined opinions, that the principles upon which 
society is organized are radically wrong. 

The manner in which the writings of Mr. Henry 
George have been received, read and commented 
upon, shows this quite sufficiently. I do not say 
that he has secured, in this country, a large follow- 
ing, who are ready to put in practice his scheme for 
the "nationalization of the land." His book, " Pro- 
gress and Poverty," which posterity will probably 
adjudge mere balderdash, has had a wider circula- 
tion than any other book published in recent years. 
It has been seriously and respectfully read ; and the 
tone in which editors and professors and thoughtful 
men speak of it, shows, at least, that much doubt 



Introduction. 



exists as to whether his claims are not sound. The 
partial and inadequate character of the replies which 
have been made to his arguments, and the bad 
temper with which his views have been denounced 
without being disproved, exhibit too the profound 
impression which he has made on the public mind. 
I think, I may describe the state of mind, in which 
Mr. George's book is generally read, as one of in- 
voluntary credulity. Men refuse to accept and act 
upon the conclusions, but do not deny the argument. 
Although I venture into this field with much 
hesitation, I shall attack the very foundation of Mr. 
George's argument. In doing this, I shall be com- 
pelled to controvert the positive conclusions of much 
higher authority than Mr. George can claim to be. 
I expect to be misunderstood by the superficial, 
condemned by the careless, and perhaps villined by 
partisans and controversialists. I wish to disclaim at 
the outset a too positive tone, for in examining 
these great questions there is always the danger 
that one may mistake a part of the subject for the 
whole. There may be facts just outside the field of 
vision, which, if embraced in the view, would mate- 
rially modify or change the picture. But while 
admitting this possibility, I shall strive to tell accur- 
ately, and without prejudice, so much as I have to 
tell. The proper spirit it seems to me, is that each 



8 The Labor - Value Fallacy. 

one shall describe clearly what each one sees, but 
with the constant admission that no one can see it 
all. 

I do not appeal to the authority of great names, 
but to the every -day common sense of those who 
favor me with their attention, and I shall be satisfied 
if I may be able to impart to some well-meaning- 
men new confidence in old virtues. If I can show 
that intelligence, diligence, sobriety and honesty still 
remain the only trustworthy means by which success 
and contentment can be attained, and that all theor- 
ies for securing the rewards of these virtues, without 
the rigid practice of them are fallacious and vain, I 
shall rest well pleased. 

There are many who are looking gloomily into 
the future, seeing there the triumph of socialism — 
family ties and home life destroyed, social inter- 
course made a monotonous routine of distasteful 
endurance, and man reduced to a mere feeding, 
muscle-exerting machine. It is my aim to prove to 
those discouraged by this vision, that the true pro- 
gress of mankind is not in this direction, and that 
it needs but a clear appreciation of the fundamental 
conditions of economic relations to dissipate this 
disagreeable apprehension. This horrible Franken- 
stein, socialism, now dominates with its baleful power 
many minds. If the central and vital secret of this 



Introduction. 9 



monstrous enchantment can be touched and destroyed, 
it will vanish shrieking, like the baffled evil genius 
of the Arabian tale, and its victims, relieved of its 
paralyzing presence, will breathe again with old 
courage and hope. 



THE LABOE- VALUE FALLACY. 



There are two kindred propositions,, which are gen- 
erally tacitly assented to, and which I think produce a 1 
a vast amount of discontent and misery. These are 

i st. 'All wealth is created by labor. 

2nd. The title to all wealth ought to be vested in the 
laborers who have produced it. 

To a great many intelligent people, I have no doubt, 
these propositions seem self-evident truths. They pass 
currently unchallenged. They appear as the founda- 
tions of the creeds of nearly all the labor agitators. 
They give the key note to the labor discussions in the 
newspapers. They figure prominently in political plat- 
forms, and in the minds of numbers of men, who are 
neither agitators, editors nor politicians, there is a con- 
sciousness, proceeding from habit, that it is useless to 
question these dictums. There are thousand of work- 
men, too, to whom these propositions have an almost re- 
ligious sacredness, and in whom, sullen rage and feelings 
of continued injury are produced, by ruminating upon 
them. They furnish the basis for all modern socialist sys- 
tems. The International with its million of members, the 
Nihilist societies of Europe, the socialist-labor parties 
of Germany and the United States, have been animated 



The Germ of the Fallacy. 11 

and energized by belief in them. And whatever of 
logical consistency one can discover in the writings of 
Mr. Henry George, comes from the assumption of the 
truth of these, his fundamental premises. 

It is my purpose to call in question the truth of these 
important propositions. I think them wholly false. I 
think that all theories and systems springing from them 
must be erroneous and demoralizing, and that all 
attempts to put them in practice will end disastrously. 

The germ of the proposition that all wealth is created 
by labor can be traced to Adam Smith. He said, in 
" the Wealth of Nations," " The real price of every- 
thing, what everything really costs to the man who 
wants to acquire it, is the toil and trouble of acquiring 
it, etc." " Labor was the first price — the original pur- 
chase-money that was paid for all things." " In that 
early and rude state of society, which precedes both 
the accumulation of stock and the appropriation of 
land, the proportion between the quantities of labor 
necessary for acquiring different objects, seems to be 
the only circumstance which can afford any rule for 
exchanging them for one another." 

These and other similar expressions, which can be 
found in his book, are by no means the equivalent of 
the modern form of this proposition. Adam Smith 
seems to regard these ideas concerning value, as merely 
suggestive, and as applying especially to the early and 
chiefly imaginary condition of man. When he treats 
of actual transactions in the market, he accounts for the 
values of commodities in quite another way. But he 



12 The Labor - Value Fallacy. 

said enough to suggest the notion to Ricardo, and it 
was by him made more definite and positive. Ricardo 
maintained that the exchangeable values of commod- 
ities are in proportion to the quantities of labor expended 
in their production. But he carefully explained that 
this is true only of commodities in the production of 
which unrestrained competition is possible. 

John Stuart Mill gave much encouragement to the 
growth of this proposition, by the professed adoption 
of Ricardo's definition, although qualifying his approval 
by many important conditions. He said, " The value of 
commodities therefore depends principally, .... on 
the quantity of labor required for their production ; 
including in the idea of production that of conveyance 
to market." He also carefully limited the application 
of this rule, " to cases in which values and prices are 
determined by competition alone." 

Following in the foot-steps of these illustrious think- 
ers, subsequent writers on political economy have 
treated of value as the creation of labor, generally com- 
plicating the idea with more or less original modifica- 
tions, but almost always presenting labor as the most 
important element in determining value. Even Bas- 
tiat's definition of value, " the relation of two services 
exchanged," receives this interpretation from many of 
his disciples, service being understood by them to mean 
labor. 

The result of these discussions has been, that the 
various complicated exceptions to this theory of value 
have been overlooked by general readers, and the cen- 



The Foundation of Socialism. 13 

tral idea only has remained in the popular opinion ; 
and it has come to be commonly accepted as a funda- 
mental truth, that value is created solely by labor. 

On this foundation the socialists have built. Karl 
Marx is probably the leading socialist reasoner, and his 
reasoning starts from the assumption, that all value 
should be measured in units of labor. It was his argu- 
ment, preached among the workmen of Germany and 
France, which caused a million names to be enrolled as 
members of the secret society of the International. 
It was his teaching, developed though the International, 
which contrived, directed and afterwards approved the 
atrocities perpetrated in 1871, under the Commune of 
Paris. These theories animate the nihilists of Russia, 
and kindle in the breasts of students and young girls 
an enthusiasm for assassination and destruction, which 
the severest punishments cannot repress. 

I confess, that if Karl Marx is right, in assuming that 
all value is created by labor, and that laborers are justly 
entitled to the products of their labor, that it is ex- 
tremely difficult to show where his followers are logi- 
cally wrong, in concluding that all private property is 
theft, that property owners are generally criminals, and 
that those who support and administer governments, 
which do not recognize the right of the laborer to pos- 
sess all the products of his labor, are social pests, 
whom it may be a social duty to remove. 

That this conclusion is warranted by this premise, is 
evidenced by the paralysis which has affected the rea- 
soning world, while these results of these doctrines are 



14 The Labor -Value Fallacy. 

being worked out before the public eyes. Intelligent 
men all over the world shudder at these sights, but are 
dumb. Aristocrats tremble, contrive more terrible pen- 
alties, and make martyrs of the fanatics. Men of peace 
and property everywhere look with apprehension into 
the future, and hope the present organization of society 
will last out their time. But no where is there a voice 
raised to say, that this crusade against society is based 
upon a cunning falsehood, which will prove an eco- 
nomic absurdity, whenever brought to a practical test. 

The following is the argument, which leads from the 
admission that all wealth springs from labor, to the jus- 
tification of the annihilation of civilization, by a chain 
whose links are too strong to be easily broken : 

All wealth, that is everything which has exchangeable 
value is created by labor. Then everything not created 
by labor has no exchangeable value and is not wealth. 
But many things not created by labor are bought 
and sold and treated as wealth. It follows that 
traffic, in things not created by labor, is a wrong 
done to laborers. All things not produced by labor 
are for the common use of all men. That indi- 
viduals should be permitted to appropriate to their 
own exclusive use these objects, and shut out other 
men from the enjoyment of them, is a monstrous out- 
rage. To put an end to this wrong is the aim of so- 
cialism. But it can be readily seen that the task of 
remodeling society by degrees is a hopeless one. So 
intricately is this great so-called wrong woven in all the 



The Socialist Argument. 15 

relations of men, that centuries of continuous agitation 
can not be expected to eliminate it. There is logically 
and consistently nothing to be done but to destroy the 
whole fabric, and make out of the ruins a new civiliza- 
tion, which shall know no wealth but that created by 
labor. 

In the view of the sincere socialist mankind will be 
perfectly prosperous and happy, if all the gifts of nature 
are held as common possessions, and if a benevolent 
common government supplies the wants of each indi- 
vidual, while expecting each to create value for the 
common benefit, according to his ability. Believing 
this, and seeing poverty and misery in every habitable 
land, is it wonderful that the earnest socialist proposes 
thorough measures. To the majority of persons, who 
are quiet, law-fearing, property-cherishing citizens, the 
anarchists and nihilists seem savage beasts, and their 
doctrines the incomprehensible malice of fiends. But 
to themselves, it can not be doubted, they appear self 
devoted benefactors of the human race. Their enthu- 
siasm has been compared by a careful observer to that 
displayed by the early Christians, when they looked 
hopefully for the general destruction of the world, and 
saw, with eyes of faith, a new heaven and a new earth 
arise from the burning elements, and were led by this 
vision to willing martyrdom. 

It is remarkable that although socialist doctrines, 
based on the labor value of all property, have been 
earnestly advocated by many able and sincere men 



16 The Labor - Value Fallacy. 

such as Saint Simon, Owen, Fourier and Marx, for more 
than half a century, they have produced no impression 
upon the organization of society. As far as I can dis- 
cover, there has been no change or modification of so- 
cial order effected by socialist sentiment, and yet these 
sentiments have received respectful attention, especially 
in this country, and have been adopted and put to prac- 
tical test, at one time or another, by many well in- 
formed and earnest people. Isn't it strange, that if 
there is any thing really capable of improving society 
in socialism, it should not have developed by this time, 
and been made use of ? That no such influence has come 
from socialist discussions is pretty good evidence, that 
no beneficial reforms of present conditions should be 
looked for from that source. It is evidence also, that 
the extreme socialists, the anarchists and nihilists, are 
logically correct in their position. Socialism is inca- 
pable of modifying existing society and changing its 
form by degrees. The only consistent socialist is he 
who goes to the root of the matter at once, and desires 
the total destruction of all property, that on the ruins 
of civilization, a new society may grow up, in which no 
property will be permitted to exist, which will not ex- 
change according to the quantity of labor exerted in 
producing it. The only mistake the anarchists and 
nihilists make is in not going far enough. Their pro- 
gramme is incomplete, in leaving human nature un- 
changed. To fully accomplish their object, they need 
the services of a comet or of a glacial epoch to wipe 
mankind off the earth's surface, and then they would 



Consistency of the Anarchists. 17 

be obliged to find a new creative energy, to produce a 
new order of beings, who would "produce according 
to their capacities and consume according to their 
needs." There is no other reform radical enough to 
satisfy the demands of the socialist theories, and no 
less thorough measures will give their system a fair 
chance. 

The anarchists deride their half-hearted brethren, 
who merely advocate the confiscation of private owner- 
ship of land, for the inconsistency and the inefficiency 
of their proposals. They sneer equally at the moder- 
ate (!) idea, which is now cherished by probably a ma- 
jority of the workmen of France, that the State or the 
municipalities may be captured by the exercise of the 
elective franchise, and the rate of wages fixed to meet 
the wants of the laborers, some sort of penalty estab- 
lished for exceeding the regular hours of labor, and a 
law passed that work (and a satisfactory compensation) 
shall always be furnished to those desiring it by some- 
body. The anarchists are right. These reforms can 
never be secured by peaceful means, and can never be 
made parts of the present systems. The whole theory 
of existing governments is opposed to these changes. 
If carried by all the ordained means of establishing 
laws, not one of these propositions could be success- 
fully put into effect. They would fail as all similar 
laws have heretofore failed, and their discouraged pro- 
jectors would then have no refuge for their hopes, but 
in anarchism and the complete demolition of all gov- 
ernments. The anarchists are acute enough to see 



18 The Labor -Value Fallacy. 

this, and so they treat all these moderate counselings 
with undisguised contempt. The anarchists are the 
enthusiasts, the fanatics of socialism. They will hesi- 
tate at nothing, if a. chance for action presents itself, 
and, consistent in their belief, they will lead, and if a 
temporary advantage is gained, the mass of more con- 
servative socialists will follow them, just as they fol- 
lowed them in Paris in 187 1. France is just now the 
field in which these demonstrations are most likely to 
be made. A great part of the handicraftsmen and 
many of the agricultural laborers have socialist opin- 
ions. A political revolution will furnish opportunity. 
The anarchists will assume control, and will display 
a reckless energy, which Frenchmen always admire. 
They will be followed by an immense army, which will 
wage war, in all the large cities of France, not only 
against persons but against property, and will destroy 
with a wantonness which has never been known before. 
This civil war will end, as it only can end, in the res- 
toration of order in a desolated land. 

This is all likely to happen, and will possibly be the 
next important event in the record of socialism. This 
is all caused by the belief that all value is created by 
labor, and that the laborer is rightfully the owner of 
the products of his labor. If these propositions are 
true, the socialist mob will be justified in reducing to 
ruins the cities of France. There is no stopping place, 
between admitting these propositions and committing 
France and every other civilized land to dynamite and 
fire. Is not this sufficient to suggest grave doubts, as 



Mild Forms of Socialism. 19 

to the ability of labor to create value ? Is not this a 
sufficient reductio ad absurdum ? 

The tendency to socialism is probably indicated by 
the desire to advise rich men how to make the best use 
of their property. This office of gratuitous adviser to 
the wealthy is assumed by many well-meaning people, 
including not a few editors of newspapers. These 
speak with the air of authority, as if they had some 
sort of public commission, and threaten dreadful but 
indefinite consequences if their advice is not followed. 
These would probably disclaim any socialist sympathy. 

The mildest form of acknowledged socialism is prob- 
ably represented by the proposition to compel, by une- 
qual taxation or otherwise, the owners of large unoc- 
cupied estates to dispose of their lands or open them 
to settlement. I think the beginning of socialism may 
be seen in an inclination to make the burden of taxa- 
tion rest, in undue proportion, on the larger owners 
of property. This would be a virtual violation of the 
implied contract which society has entered into with 
each of its members, which stimulates individual exer- 
tion by guaranteeing equal protection to all. It would 
discourage exertion by putting a stigma on good for- 
tune and success. 

The proposal is sometimes made that large incomes 
should be taxed at a high rate for the avowed purpose 
of preventing property accumulating in single hands. 
This would be a return to semi-civilized methods, such 
as prevail in oriental countries, where men are forced 



20 The Labor- Value Fallacy. 

to conceal their riches from the rapacious tax-gatherers, 
in order to avoid confiscation. 

Bismarck has been accused of socialist tendencies, 
because he has proposed to establish a state insurance 
of support to workmen, disabled in prosecuting their 
craft. But this may be explained, as a measure of pub- 
lic policy ; and such a system might and probably would 
be administered by the German government, so that it 
would not offer a reward for shirking. It can easily be 
imagined, that such insurance might be less socialistic 
in its influence than the old poor laws of England, and 
might become a beneficial element in a well regulated 
industrial society. 

There are a considerable number of professed polit- 
ical economists, who are not ready to call themselves 
socialists, who nevertheless adhere to the purely social- 
ist doctrine, that inheritance of property is a viola- 
tion of the rights of man. J. S. Mill took substan- 
tially this position, led to it by the assumption that the 
title to all property is derived from labor. It follows 
that the law, which gives to the son property for which 
his father alone labored, confers an unjust title. This 
conclusion must follow this assumed premise, but I 
hold the premise to be wholly false. 

The first landing place of active agitation on the log- 
ical ladder which leads, from the admission that all 
value is created by labor, down the bottomless pit of 
socialism, is at present occupied by Mr. Henry George 
and his followers. Mr. George writes in a popular and 



He my George's Socialism. 21 

persuasive manner, and his writings have been widely 
read. His plan for the relief of the poor is to have 
the State take possession of all land and become the 
universal landlord, applying the rents received to the 
wants of the needy. This idea is not original with 
Mr. George, but he presents it just now in anew dress, 
and calls it " the nationalization of the land." It is an 
old notion, but has not received much attention here- 
tofore from practical men, for the obvious reason that 
in practice it would multiply indefinitely the number 
of the needy, and would greatly decrease the number 
who would be willing to pay rent. 

" Nature gives wealth to labor, and to nothing but 
labor. There is and there can be no article of wealth 
but what labor has gained by making it or searching 
for it, out of the raw material which the Creator has 
given us to draw from. If there was but one man in 
the world it is manifest that he could have no more 
wealth than he was able to make and to save. This is 
the natural order." From " Problems of the Time," 
by Henry George. 

This is Mr. George's fundamental principle. If it 
is admitted there is no use in denying that private prop- 
erty in land is unjustifiable. But, believing this, why 
does Mr. George stop with this demand ? Perhaps he 
doesn't like the looks of the pit below him, and fancies 
that mankind will be able to stop on his little landing- 
place. But he is greatly mistaken. The inexorable 
ladder leads down to chaos. Give us once the nation- 
alization of the land, and one must then follow the 



22 The Labor - Value Fallacy. 

footsteps of the anarchist and the nihilist to a lower 
deep. 

The next important point to which a formidable 
body of socialists expect to carry affairs is the recogni- 
tion of "the right to labor." It is for this the work- 
ingmen of France are now pressing. If we admit that 
a portion of the soil is the birthright of every man, we 
must allow that society in taking possession of the soil, 
or permitting a limited number to take possession of it, 
deprives the landless of their rights. As a compensa- 
tion for this deprivation — for this arbitrary taking away 
of the means by which nature intended all men to 
obtain support — society must provide each man with 
an occupation, an opportunity to labor, by which he 
may earn a comfortable living. This is " the right to 
labor." It is not a new idea. It was put in practice 
to a limited extent, but with most disastrous results, by 
the influence of Louis Blanc under the Republic of 
1848. More than anything else this wretched attempt 
to force the State to support the artisans of Paris, dis- 
gusted the people of France with a republican form of 
government at that time, and prepared their minds to 
accept the empire of Louis Napoleon. Events are moving 
in similar grooves in France now. The French people 
are now more confirmed in republican habits of thought, 
but the socialist element is also stronger and more 
hopeful. The workmen expect to obtain power by 
their votes, and they propose to have the right to labor 
acknowledged, and a law passed fixing a minimum of 
wages, and forbidding the dismissal of laborers, except 



French Socialism. 23 

for mutiny, and providing that the State shall lend 
capital to great corporations, which shall undertake the 
principal branches of industry. When this or any sim- 
ilar scheme shall be taken up by the French Republic, 
the world may prepare to hail another Emperor 
of France. He will not then be far away, although 
France may be obliged to pass through fire and ruin to 
find him. 

It cannot fail to strike the curious inquirer as sin- 
gular that although there are millions of men, who 
believe that value or wealth is created by labor, and 
that the title to all wealth should be in the laborers, 
who have produced it, that no community or state has 
been organized successfully on this principle. It is 
true that many such attempts have been made, but 
these have all proved total failures, with the exception 
of one or two, which still drag out miserable existences, 
furnishing illustrations of the wretchedness of the cause 
in which they suffer. 

It is a matter of surprise too, that Mr. Henry 
George, having doubtless caused much mental misery 
among his landless readers, does not attempt to satisfy 
the longings for the happiness, which is to be obtained 
under "nationalization" of land, by organizing a 
colony to occupy some unappropriated part of the 
earth's surface. If Mr. George can show us by actual 
demonstration how a community, practicing his teach- 
ings, obtains more happiness individually and collect- 
ively than others, he will have done more to convince 



24 The Labor -Value Fallacy. 

us, than by printing the most eloquent appeals. As it 
is, he has only caused a great deal of discontent, and 
it is open for the least argumentative questioner to re- 
fute him, by pointing out the very considerable con- 
tentment and happiness which can be seen in societies 
acknowledging and protecting individual ownership of 
land, and challenging him to show better results under 
his system. The fact that he has made no attempt to 
do so, is to be counted against him, as showing lack of 
faith in his own principles. 

During the last century the civilized world has been 
engaged in devising and celebrating the apotheosis of 
labor. Poets have sung its virtues. Orators have 
declaimed its merits. Statesmen have done it honor. 
And political economists have fallen down and wor- 
shipped it. Far be it from me to treat it with irrever- 
ence ; but I wish humbly to suggest that there may be 
other gods in our economic pantheon, and that possi- 
bly a little incense, burned before some of the other 
productive powers of our mundane system, may be 
equally well consumed. 

Our progenitors in prehistoric times adored the sun 
as the producer of all good. From his beams they 
seemed to derive all benefits, and to him they rendered 
all praise. Later on, in the dawn of history, the ele- 
ments became the fashionable sources to which to ac- 
credit blessings. Earth, water, fire, air were all per- 
sonified and deified, and mankind gave to them respect- 
ful prayers and thanks for the satisfaction of all their 



The Apotheosis of Labor. 25 

wants. After a while the idea of deity became ele- 
vated, but throughout Christendom, for centuries, there 
were a great variety of saints and supernatural agents 
to whose kind offices prosperity and good fortune were 
ascribed. Just at the beginning of the commercial era 
of modern times, the precious metals received the eager 
reverence of men, as the wealth containing, if not the 
wealth producing powers. And when these lost this 
exalted station in the estimation of men, Quesnay and 
the physiocrats raised agriculture to the high place of 
creator of all value. 

This is not by any means an enumeration of all the 
objects and forces to which homage has been rendered 
in return for the possessions, which men have used and 
enjoyed. But it is sufficient to show that there has 
been a difference of opinion, at different times, as to 
the real causes of wealth. It seems to show also that 
certain popular notions have prevailed, to the exclusion 
of all others, at certain periods. Noticing the fallibility 
of human opinion in past ages may suggest a doubt as 
the correctness of our own time's belief. 

It was, no doubt, in opposing the mercantile theory 
and the agricultural theory that Adam Smith suggested 
that labor was the first price paid for all things. The 
world was in the mood to take up and exalt labor. 
The author of the "Wealth of Nations " struck a respon- 
sive cord. Labor had been from the foundation of the 
world overlooked and despised. Invention was then 
beginning to furnish new means of satisfying desires. 
Commerce was developing new avenues of activity, 



26 The Labor -Value Fallacy. 

new regions of the earth's surface, and new political 
ideas. It was fitting that labor should be treated with 
greater respect, and be lifted to a more important place 
in the calculations of men. An era of progress in 
industry, hitherto undreamed of, was commencing. 

The importance of the suggestion made by Adam 
Smith, at that time, can hardly be over-estimated. It 
gave a philosophical basis to the economic progress of 
the civilized world. But the time will come, if it has 
not already come, when the world may ask to its ad- 
vantage, if there are not other elements of progress 
which deserve its attention, and whether there is not 
danger of reaching a pernicious extreme and subordi- 
nating the best interests of society to the demands of 
the self-conscious, all-demanding workingman — the 
spoiled child of the nineteenth century. 

I am far from believing that the real working men 
of this country, who are for the most part orderly, con- 
tented citizens, are avowed or secret socialists, and it 
is only of those who are members of socialist organi- 
zations and have socialist sympathies of which I now 
speak, as wishing to give labor a pernicious influence 
in society. But I hope to convince all candid readers, 
that the best interests of society are not to be served 
by unduly exalting labor as the creator of all value ; 
but that a society in which there are many grades of 
individual inequality, — in which each, having different 
accomplishments, and diverse duties, does his best in 
his particular place, is the highest form of social devel- 



Labor and Wealth defined. 27 

opment, and that in which each enjoys most perfectly 
the happiness of which his life is capable. 



I have endeavored to show what are the logical con- 
sequences of the assumption that all value is created by 
labor. I will now try to prove that this assumption is 
false, and that it has no reasonable foundation in human 
nature or in fact. 

I must be understood as using the term labor, in the 
sense in which it is generally employed, as meaning 
manual labor, that is physical exertion directed by more 
or less mental effort and put forth for some useful end. 

By the term value I mean only value in exchange, 
and by the term wealth, the aggregate of those things 
to which value in exchange attaches. I do not suppose 
that anyone, even the most stubborn socialist, will claim 
that value in use is always the creation of labor, or that 
things which have no value in exchange can be prop- 
erly called wealth, although there are many passages, 
in the writing of Mr. Henry George, and others, which 
might be interpreted to have this signification. 

* The South-Sea Islanders, who are able to supply 
their individual wants by their own individual exer- 

* Captain Cook found some Australian tribes to whom the idea of traffic 
seemed unknown. They received what was given them readily, but they re- 
ceived it as a present only ; they seemed to have no notion of giving anything 
in lieu of it. — Bagehot, Economic Studies, pg 41. 



28 The Labor -Value Fallacy. 

tibns, have nothing to exchange with each other, and 
consequently have no wealth ; but when a European 
trader comes, and offers beads for their cocoanuts, 
wealth makes its appearance. A man living and dying 
alone, on an unvisited island, has no wealth, although 
he may have all the wants supplied and many posses- 
sions. This word is used very loosely, even by politi- 
cal economists. It is frequently employed to describe 
possessions in general, without reference to their ex- 
changeable quality. But unless it can be held to apply 
only to those possessions which have value in exchange, 
it loses all precision. Air and water are possessions, 
which have value in use but no value in exchange, and 
should be reckoned as wealth, if wealth is not limited 
to things which have value in exchange. Mr. George 
frequently uses the term wealth in this befogging sense, 
to describe things having value in use but no value in 
exchange. He has done so in a passage which I have 
previously quoted, but I do not think that he will con- 
tend that it is its proper use. 

At all events, I am gaining no unfair advantage for 
my argument by confining the term to those things to 
which value in exchange attaches. The assertion that 
all things which have value in use are produced by 
labor refutes itself. There is no occasion fo» argument, 
unless wealth is held to mean only those articles which 
have value in exchange. 

I have searched diligently, in works on political 
economy, for some proof that value in exchange is 
created by labor. I find plenty of assertions of this 



Not Found in Practice. 29 

dogma, plenty of references to authority, plenty of at- 
tempts to illustrate it by describing the doings of pri- 
meval men, but I have not been able to find any effort 
to derive this supposed rule from actual observation or 
experience. 1 have tried many times to discover in 
real transactions, in the most simple as well as the most 
complex, what influence the labor which had been em- 
ployed in the production of an article has exerted in 
determining the ratio, in which it could be exchanged 
for other articles. But with all my efforts, I have not 
found a single instance, in which the price demanded 
or paid for any thing bore any ascertainable relation 
to the labor which made it. I may be more dull than 
others about this. I have often concluded that I must 
be so ; but still the unguessed riddle would not leave 
me. I have not been able to admit to myself that an 
accepted axiom in economics could have no practical 
application. But, on the other hand, I have not been 
able to find any working illustration of this one, I find 
its influence everywhere in theory, but nowhere in 
practice. It is indeed frequently brought forward, as 
a specious argument, to affect prices. A manufacturer 
may resort to it to induce a better bid for his product, 
or a merchant may plead it to avoid loss on his wares. 
Its use is a favorite artifice among auctioneers. But if 
its use occasionally enables an expert to drive a better 
bargain, the trick is pretty sure to succeed only in sin- 
gle cases, and general market prices are not affected 
thereby. The only place, where it seems to be sin- 



30 The Labor - Value Fallacy. 

cerely accepted is in the destructive and revolutionary 
plans of the socialists. 

Let any graduate of any of our many colleges start out, 
with the teachings of his professor of political economy, 
and the definition of value from his text book fresh 
in his mind, and engage in business on the basis that 
labor creates value. He will find many things selling 
for more, and many for less than they may appear to be 
worth, according to this standard. But he must buy 
for exact labor-value and, adding the value of his labor, 
offer them for sale at the exact labor-value, which they 
have acquired in his hands. If he should carry on a 
profitable business on this basis, he would furnish an 
illustration long needed in political economy. But no 
one can doubt the result of such an experiment. A lot 
of rubbish on which labor had been wasted, would be 
accumulated on his hands, which would wait in vain 
for purchasers. 

Let any mechanic, who has been persuaded by Mr. 
George's writings to believe that value is created by 
labor, make a practical test. Let him rely on this prin- 
ciple fully, and make no contract for his remuneration 
before completing his work. But let him turn his hand 
to whatever work takes his fancy, and then let him call 
on the world to come and buy his product, at a price 
fixed according to the amount of labor he has expended 
upon it. Will his appeal bring purchasers ? Will 
he not find that his ability to exchange the 
article which he has made, for money or for any- 
thing else, depends solely upon its adaptability to the 



Owens Labor - Exchange. 31 

wants of some one, and not at all upon the labor which 
he has expended upon it ? A few such practical trials 
of the first principles of socialism by workingmen, who 
have been attracted by the promising pictures drawn 
by socialist agitators, would produce a very good 
effect. 

A very amusing account is given in Holyoake's 
" History of Cooperation " of several attempts about 
fifty years ago to establish labor-exchanges. These 
labor-exchanges were consistent endeavors to carry on 
trade upon the theory that all value is created by labor. 
It was provided that any kind of commodity could be 
brought to the exchange, and apprised according to the 
amount of labor expended in its production. Labor 
notes were then issued therefor, the unit of labor being 
one hour, and these notes were receivable in the 
exchange for any article according to its appraised 
price in labor units. Mr. Robert Owen, the wealthy 
philanthropist, was the originator and chief director of 
the most important of these labor-exchanges in Lon- 
don. He provided the means to start it, and gave his 
time to the superintendence of its operations. His 
popularity brought custom to it, and his ability gave 
the experiment the best possible chance of success. It 
carried on a large business from the start, and at first 
appeared wonderfully successful. A large amount of 
merchandise appeared on its shelves, and its labor-notes 
were circulated quite generally in the neighborhood. 
These notes were received with considerable favor by 



32 The Labor - Value Fallacy. 

local tradesmen in exchange for their goods, and it 
seemed as if a new era in commercial affairs had 
dawned. But soon it began to be perceived that the 
really desirable goods were disappearing from the 
shelves of the Labor-Exchange. The local tradesmen 
who had shown so much favor to the movement, at 
the outset, had succeeded in transferring to the Labor- 
Exchange their unsalable stocks, and had taken away 
the really valuable goods which the enthusiastic believ- 
ers in labor-value had brought in. The labor-notes 
began to depreciate, and fell rapidly into discredit, 
when it was found that little remained in the Labor- 
Exchange worth the trouble of removing. The whole 
affair came to an end in less than thirty days after 
beginning business. There were labor-exchanges on 
the same plan started about the same time in Birming- 
ham and Sheffield, and in America, in Cincinnati and 
New Harmony ; but all of these seem to have been 
miserable failures from the first. 

It is strange that these very well known efforts to 
effect exchanges according to the generally received 
theory of value, should not have attracted more atten- 
tion. As far as I know these were the only attempts 
of this sort ever made. They failed miserably, and yet 
the theory remained unshaken, and has been winning 
adherents ever since. 

I think if any one analyses the elements of the price of 
any commodity, (Price, which is value expressed in mon- 
ey terms, affords the only opportunity for accurate obser- 



No Labor- Value recognized in fixing prices. 33 

vations of value.) he will find that labor employed in 
production bears no regular nor calculable proportion 
to the quantity of gold, for which the commodity may 
be from time to time exchanged. If such proportion 
cannot be discovered and stated in comprehensible 
language or figures, I claim that it is absurd to assert 
that labor determines value, and, if it is possible to be 
so, it is still more idle and foolish to maintain that labor 
creates all value. 

I think that it will be acknowledged by any one, who 
studies the fluctuations of the markets, where the 
important commodities of commerce are bought and 
sold, that the wants of men are the chief influences 
which determine prices. The most favorable condi- 
tions for studying the influences by which prices are 
made are furnished by the great exchanges, in which 
the chief commodities, such as grain or cotton, are 
traded in. Here are concentrated, as in a focus, all 
these influences, and men of keen minds and wide infor- 
mation are giving closest attention to observe their 
force and effects. 

No scientist gives more concentrated thought to the 
object which he holds under his microscope, than do 
the dealers in the great exchanges give to the course 
of trade. They, if any men, should know the powers 
which form and fix prices, and if there is any agency 
which creates or determines value, they should recog- 
nise and appreciate it. 

Let the student of value go on the floor of the Board 
of Trade in Chicago, and observe what influences are 

3 



34 The Labor - Value Fallacy. 

regarded as important in determining the price of 
wheat. He will find that all these influences may be 
classed easily under two heads, first, and perhaps most 
important, the demand, second, the supply. If he is 
able to impart any information, which may come under 
either of these heads, he will be listened to with eager 
interest. But suppose that he has been able to make 
an accurate calculation, which shows the amount of 
labor expended in producing a bushel of wheat, and 
that he exhibits this valuable contribution to economic 
science to the members of the Chicago Board of Trade. 
He will find that no one has any time to spare to attend 
to his great discovery, and that it will have no more 
effect on the course of prices than a calculation of the 
ages of the Pyramids. 

The conclusion, after observing the opinions of 
experts in prices on the Board of Trade, will be that 
prices, and consequently values, are not determined by 
any one influence or class of influences. They are as 
uncertain as human life, and as changeable as human 
opinion. They are the evidences of mental actions, 
and not the creations of physical efforts. 

The sap which swells the tree does not create the 
value of the timber. The chemical action, which 
formed the coal in the earth and the iron in the hills, 
made them exchangeable for wheat and corn, but did 
not determine their value in exchange. The wind and 
the rain and the sunshine have had their share in pro- 
ducing the things which man buys and sells and uses, 
but have had no part in the fixing of the market prices. 



Labor a Form of Energy. 35 

The labor of beasts has rendered man service, and so 
has the labor of slaves, but neither has had influence 
in determining how those services exchange. The labor 
of freemen differs in no economic sense from the labor 
of slaves. Each accomplishes its result according to the 
strength and skill of the laborer, and without reference 
to his political rights and condition. And this is true 
through the whole scale of labor, from the lowest 
drudge in the deepest mine to the professor of politi- 
cal economy in the most august university. It is the 
result which counts, not the instrument. The freemen 
has this advantage when the result is attained, — when 
the product of his labor is completed, — if he has not 
already sold his labor or his product, he may take it 
into the market and do the best he can with it. But he 
will find there, that it takes two to make a bargain, and 
that the labor which he has exerted cuts no figure in 
fixing value, unless it be that it has some subordinate 
effect on his own feelings. His main desire and his 
controlling motive will be to obtain for his product that 
which will give him greatest satisfaction, and on this 
basis the sale will be made. 

It is frequently said, that cost of production deter- 
mines value. It seems to me that this amounts to no 
more than saying, that the value of a compound com- 
modity is equal to the sum of the values of its com- 
ponent parts. This may be approximately true within 
certain narrow limits. If there is no considerable 
fluctuation in the values of the component parts, dur- 



36 The Labor -Value Fallacy. 

ing production, the value of the product, at the com- 
pletion of production, will probably be about equal to 
cost of production. But it is quite improbable that the 
value of an article, completed a year ago, is now equal 
to cost of production, or that the value of an article, 
just finished, will be equal to cost of production a year 
hence. 

This rule, even with these modifications, has many 
exceptions, and is not of much practical importance. 
It gives no opportunity for the deduction sometimes 
made from it, that therefore labor determines value. In 
those organized forms of production, to which this rule 
is generally applied, the labor employed is treated as a 
commodity. This it essentially is in all respects. 

Cost of production never determines the value of 
agricultural products, or of railroad transportation, or 
of any commodity, in which the use of land or any 
article not capable of unlimited reproduction enters 
largely. 

Mr. Henry George and other socialists object to 
treating labor as a commodity. They give no reason 
for this objection, but seem to regard such a considera- 
tion of labor as a desecration of a holy subject. I 
cannot see that labor has any place in political economy 
except as a commodity. It is bought and sold and 
exchanged with other commodities, and the attempt to 
invest it with a different character has produced a great 
deal of confusion. Man, as a laborer, has the same 
position in economics as any other machine through 
which productive force is exerted. But man as a rea- 



Cost of Production. 37 

soning being, having a soul and a vote, is entirely 
another thing, and is not treated of in political 
economy. 

Labor figures in cost of production as a commodity, 
and exercises no more influence in the price of the pro- 
duct, than does the cost of the raw material or the 
machinery. And the influence of the values of these 
component parts is not direct and absolute in determin- 
ing the value of the product, but only indirect upon 
the minds of men and thus, by affecting their judg- 
ments, upon the value. If any articles have been 
manufactured at a certain cost, under existing condi- 
tions, men suppose that more can be made while those 
conditions continue, at the same cost, and consequently 
will not pay much more, unless there is some urgency 
in the want; and the manufacturer, believing that the 
demand for his product will continue, will not sell below 
the cost of replacing it. This I think is a correct 
analysis of the way in which cost of production affects 
price, and it gives no ground for asserting that labor 
determines value. 

The claim, which is set up in many works on polit- 
ical economy, that the earliest exchanges made were 
effected according to quantities of labor, which the first 
men put forth in taking possession of, or putting in 
useful shape, the first rude articles of personal prop- 
erty, seems hardly worthy of attention. But the brains 
of eminent men, such as Ricardo and Adam Smith 
have engaged in drawing these imaginative pictures, 



38 The Labor -Value Fallacy. 

and they doubtless have some influence on general 
thought. I cannot find any warrant for these idyls of 
the prime. The most careful research into ancient 
record and tradition has not brought to light any evi- 
dence, that early exchanges were made on such a basis. 
There has been no savage tribe discovered in which 
any such system of " natural " trade is recognized. On 
the contrary, the very extensive examinations of primi- 
tive customs, made by Sir Henry Maine and M. de 
Laveleye, have shown that the first men of whom we 
have traces, were not traders at all. Human beings in 
the early ages knew no way of acquiring property from 
others but by force. Savage life has always been a life 
of warfare. Peaceful exchange is a product of dawn- 
ing civilization; and all the exchanges since then have 
been made to satisfy wants. It is highly improbable, 
therefore, that any men ever existed anywhere, who 
bartered with each other, according to quantity of 
labor. It is only in modern times that labor has been 
so systematized, and so subjected to measurement, that it 
could be compared in quantities, consequently no such 
comparisons could have been made in rude ages. 

Colins, the Belgian socialist, has proposed to reduce 
this problem to its simplest terms — a naked man and a 
planet — and thus show that all wealth is created by 
labor. If the planet may be supposed as naked as the 
man, the problem would very soon solve itself, and the 
solution would be a dead man and a planet. If the 
planet is supposed supplied with an agreeable climate 
and plenty of fruits and pleasant things, the naked man 



A Naked Man and a Planet. 39 

might get on very comfortably, but he would have no 
wealth, because his most enjoyable possessions would 
be too far from market, and would have no exchange- 
able value. The transportation rates, from the naked 
man's planet to the earth, would be more than the busi- 
ness would bear. But suppose there were two naked 
men started on an agreeable planet. Would their in 
stincts lead them at once to establish a labor exchange ? 
I think not. They would either form a primitive part- 
nership and have all things in common, or one would 
become the slave of the other, or they would find that 
their dispositions were uncongenial. In the latter case 
one would either kill the other, or they would select 
separate hemispheres for their habitations. In fact, I 
think, about the last thing to suggest itself would be 
the possibility or utility of making a trade of some sort. 
But all such speculations are idle, and prove nothing 
either way. We have not solitary naked men on iso- 
lated planets to deal with, but many millions of men 
on a highly organized earth. There is a great deal of 
comfort and happiness enjoyed by these millions of 
men, and not a little of it is due to the high organiza- 
tion of the society in which we all make a living. It is 
much better for us to study the principles of this or- 
ganization, that we may preserve and improve it, rather 
than contrive imaginary cases of imaginary beings to 
encourage us to despise and destroy it. 



40 The Labor -Value Fallacy 



The pernicious influence which the fallacy that all 
value is created by labor, exerts over all thought at the 
present time might be illustrated by innumerable quo- 
tations, from all classes of writers. The deductions from 
this false premise appear on all sides. We have them 
from pulpits ; we find them taught in the public schools. 
We read them in all the newspapers, and in all sorts of 
publications. They appear in the messages of Presi- 
dents and in the addresses of Prime Ministers. Con- 
gressional documents abound with them, and political 
speeches are full of them. I have thought of making 
a collection of the most extraordinary outcroppings of 
this capital error. I could easily fill a volume with 
such quotations, and that, too, from the utterances of the 
most prominent men of the day. Strange reading such 
a volume would seem a hundred years hence, when, it 
is to be hoped, the socialist question will have been 
finally disposed of, and the world will be riding some 
other hobby. It would show that even the greatest 
men have a parrot-like way of using words, which they 
hear others use, and that few take the trouble to exam- 
ine into the significance of popular expressions. One 
of the most common and most obvious of these deduc- 
tions, that the title to all property is justly vested in 
the laborers, I will endeavor to consider briefly. 

I would like to quote a whole chapter from J. S. 
Mill's Political Economy on this point, but I will for- 



/. S. Mill's Views. 41 

bear and content myself with a few of the opening sen- 
tences, which I think fairly represent his views. He 
says : 

" The institution of property when limited to its 
essential elements consists in the recognition in each 
person of a right to the exclusive disposal of what he 
or she have produced by their own exertion, or received 
either by gift or by fair agreement without force or 
fraud from those who produced it. The foundation of 
the whole is, the right of producers to what they them- 
selves have produced. It may be objected, therefore, 
to the institution as it now exists that it recognizes 
rights of property in individuals over things which they 
have not produced." 

Mr. Mill was judicious in his use of words, and care- 
fully modified any expression which might be con- 
strued as bearing too harshly on established institu- 
tions, but he is forced by this definition of property to 
deny the right of inheritance, and the right of the land- 
lord to the so called "unearned increment" in the 
value of the land. He shows doubt as to the justice 
of both of these in this chapter. 

It is interesting to compare with this calm utterance 
of a philosopher, the opinions of the members of the 
Mano JVera, the Black Hand, of Spain. They say in 
their programme, issued before the last effort to assas- 
sinate those of their neighbors whom they thought 
better off than themselves, 

" All property acquired by the labor of others, be it 
revenue or interest, is illegitimate ; the only legitimate 



42 The Labor - Value Fallacy. 

possessions are those which result directly from per- 
sonal exertions." 

This is not quite so well expressed, but it means the 
same, as Mr. Mill's words, and I do not see how Mr. 
Mill could severely criticize the assassins. 

Mr. Mill was considerate and kind. He had no san- 
guinary or revolutionary spirit. Having stated his the- 
ories, such as his labor-theory of value, or this theory 
of the right of property, he modified them, and modi- 
fied them, until they fitted pretty comfortably with ex- 
isting facts. Some of his followers, however, are not 
so circumspect. They have adopted his theories, with- 
out the modifications, and they insist upon having the 
facts fitted to them. 

M. de Laveleye says that Locke, the philosopher, 
was the first to state clearly the theory that labor is the 
basis of property, and Locke drew from this theory 
the following conclusion, which is not only a logical 
deduction, but is well developed socialist doctrine : 
" Every one ought to have as much property as is nec- 
essary for his support." 

M. Thiers in his book " De la Proprie'te" adopts and 
states this theory most emphatically. " To every one," 
he says, " for his labor, because of his labor and in pro- 
portion to his labor. We may, therefore, say dogmat- 
ically, the indestructible basis of the right of property 
is labor." M. de Laveleye, commenting on this, says: 
" It may be said, that labor ought to be the source of 



No Title by Labor known in Law. 43 

all property, but this principle would be condemnatory 
of the existing organization of society." 

In examining this subject, I have been astonished 
and almost overwhelmed by the number and weight of 
the names of modern authorities, who have given their 
unqualified approval to this doctrine. I have been sur- 
prised beyond measure, also, that none of these great 
and good men seem to have realized that in adopting 
this theory they were proclaiming that the whole fabric 
of society everywhere is a monstrous fraud, and justi- 
fying its total annihilation. But I have been, if pos- 
sible, more completely non-plussed by not being able 
to find the slightest evidence of the truth of this doc- 
trine in law or tradition or custom, in nature or in rev- 
elation. Where can the doctrine have come from ? 
What are its sanctions ? 

The lawyers know nothing of it. There is no hint 
of it in any of the codes, and neither the civil law nor 
the common law shows any trace of it. There are 
many kinds of title known to the law, but the title 
by labor is not one of them. (Unless it be, perhaps 
that patent and copyright laws can create for limited 
periods title by intellectual labor ) There is title by 
occupancy, title by possession, title by conquest, title 
by discovery, title by descent, title by purchase, title 
by gift — these all have been recognized and more or 
less respected, from time immemorial. If labor had 
any part in creating any of these legal titles, is it not 
strange that there should be no evidence of it ? Is not 



44 The Labor - Value Fallacy. 

the conclusion unavoidable, that if labor creates the 
only rightful title, the whole body of the law, ancient 
and modern is founded in injustice ? And does it not 
seem more reasonable, that the law by which the rela- 
tions of men for generations and centuries and ages 
have been controlled, is worthy of more respect, than 
a sentiment of modern philosophy, which has never had 
any standing or influence in practice ? 

There is no recognition or suggestion of the title by 
labor in custom or tradition. Since Locke wrote on 
civil government, what amounts to a new department of 
human knowledge has been opened by investigation 
into the manners and customs of ancient peoples. And 
even since John Stuart Mill's work on Political Econ- 
omy appeared, a most extraordinary addition has been 
made to our knowledge of antiquity. Of all those who 
have contributed to this new knowledge, Sir Henry 
Sumner Maine, probably stands first among English 
writers. His books are remarkable in that they draw 
few conclusions, but give many facts. They do not 
dogmatically assert that the dwellers in the twilight of 
history thought thus and so, but they exhibit all the 
evidence, and leave the reader to draw such inferences 
as seem warranted. I have read Sir Henry Maine's 
books with care, and I have not been able to discover 
a single suggestion, that it ever occurred to a primitive 
man that labor gave any title whatever to property. 

The notions of property possessed by the first rude 
men, of whose existence we find faint traces, were 



Ancient Custom. 45 



very simple compared with our own ideas. But they 
were not antagonistic to ours. Our habitual, almost 
intuitive, practices concerning property are but refine- 
ments and developments of the earliest conceptions of 
property rights, as described by Sir Henry Maine. 
He is of the opinion that the patriarchal theory of prim- 
itive life is the correct one. That is, that men at first 
associated in families, and that each family group was 
subject to the authority of the parent or eldest male 
representative of the parent. This life may have orig- 
inally been as savage as that of wild beasts in their dens. 
From so low a point the organization of modern society 
may have begun. The earliest rules concerning prop- 
erty seem to have been for protecting the ownership of 
domestic animals. Land was a secondary matter, for 
there was plenty of it, but the flocks and herds were 
the objects of desire and contention. These animals 
were the property of the family, or rather of the head 
of the family, and each of the family whether natural 
kinsman or a member of the group by adoption, de- 
fended the flocks and tended them, and took his part 
in the common fortunes. Those families or tribes, 
which subsisted largely by hunting, probably appro- 
priated certain territory and punished with death the 
intrusion within their limits of any other hunters. Sir 
Samuel Baker found the country near the sources of 
the Nile divided in this way, with well defined bounda- 
ries between many small tribes. Similar notions as to 
hunter's right to special ground were common among 
the North American Indians. 



46 The Labor - Value Fallacy. 

The right of ownership by conquest was early recog- 
nized. The property of enemies, even their persons, 
belonged without question to the victors. It is proba- 
ble that the early transfers of property were all effected 
by conquest. There is no evidence of individual own- 
ership of property among primitive men. The earliest 
transfers of property by agreement took place between 
families. It is conjectured that the first articles of in- 
dividual property were arms or clothing. According 
to early Roman law, horses, cattle, slaves and land were 
all held by the same tenure, and could only be trans- 
ferred with peculiar ceremonies, indicating that they 
were all regarded as the common property of the fam- 
ily or tribe, and could only be alienated by common 
consent. 

From these rude origins the right of property devel- 
oped its various modern forms. The general advantage 
seems to be the force which has produced the succes- 
sive modifications. There is no sign, that through the 
whole progress, the right of the laborer to the product 
of his labor has ever been respected or even asserted. 
When men became sufficiently intelligent to live peace- 
ably together in large communities, the advantage of 
individual ownership became evident. I have no doubt 
that under individual ownership land became more pro- 
ductive, cattle more carefully tended, and the state 
more prosperous. Individual land owners proved more 
energetic citizens in devising good government, and 
braver and more persistent soldiers in resisting invasion 
or pushing conquests. There is good ground for be- 



Effect of Title by Labor upon Society. 47 

lieving that the law of the survival of the fittest forced 
the adoption of individual ownership of land and other 
property upon mankind. But this process of change 
left so much of the old primitive law of property as 
could not be destroyed without disadvantage to society, 
notably the remnant of parental authority, and the 
principle of inheritance. 

The development of custom is a very attractive 
field, and much more might be said to show that the 
labor-value theory of property has thus far had no part 
in shaping man's progress from the companionship with 
wild beasts to his present improved condition. I think 
I have said enough to convince any fair minded person 
that this is the fact. Whether man would have been 
better or worse, if at any point of his progress this 
theory had influenced him, is a matter of speculation 
purely. Of this, however, would society be benefitted 
by it? I think we of the present age should be well 
assured before allowing this theory to modify or change 
our institutions. It seems tome that its general adop- 
tion would dissolve all the bands of common custom, 
would unloose all the time-honored ties of social rela- 
tions, would destroy the growth of centuries, would 
substitute anarchy for order, would make it impossible 
for one man to exist where ten now find subsistence, 
and would send those that remained of the race back 
to live in caves and to contest with animals for the 
fruits of the earth. 

It may be that some readers will construe the 



48 The Labor- Value Fallacy. 

emancipation of laborers as the recognition of the 
laborer's title to the product of his labor. But this is 
not warranted. The emancipation of laborers was 
brought about by the same causes which produced in- 
dividual ownership of land. The general advantage of 
society was served, at the periods in which the several 
modifications of law and custom were developed. 
Society became more prosperous with the growth of 
individual right to property, and still further increased 
in prosperity when it was conceded that manhood 
meant the responsibility of freemen. But it is not by 
any means the same thing to say, that man is free to 
choose how he will spend his time and his energies, and 
to say, that he has a clear title to the product of his 
labor. He may control his own powers, but he cannot 
control their effects. 

If his labor is expended upon his own property, he 
owns the product, but if on the property of another, 
he has no title to the product. The title to the product 
invariably follows the title to the material. This is the 
rule everywhere. Let us suppose this rule reversed and 
the title to the product vested in the laborer rather than 
in the owner of the raw material. The dullest imagina- 
tion can see that a state of affairs, such as never has 
existed, would make its appearance. Society would 
unravel like a web whose chief thread had been cut. 

The laborer may sell his labor, but if he puts it 
forth without a previously made or implied contract, it 
is no longer salable. He may bargain to sell his labor 
while it remains in his control, as he may any other 



The Emancipation of Laborers. 49 

commodity. In the early state of society he could not 
do this. His labor then was due to the family or com- 
munity of which he was a member, and his family or 
community accorded to him a share in its fortune. 
When society realized that the general fortune would 
be much improved if men were left to shift for them- 
selves, the laborers were emancipated. The emanci- 
pated laborer acquired the right to dispose of his own 
labor, but he, at the same time, assumed the risk of his 
own support. This new condition is undoubtedly 
highly beneficial to general society. 

Stimulated to exertion by the necessity of provid- 
ing his own support, and by the promise of greater 
comfort and enjoyment if he excels others, man has 
become violently competitive. There was little or no 
competition between individuals in patriarchal society. 
It is individual competition which has changed all the 
condition of life, and transformed the face of the habi- 
table globe. It is this which furnishes food in abund- 
ance for ten times the number of human beings, 
which the patriarchal age could have supported. 

Now and then, there may possibly be found a person, 
who would be glad to exchange his individual freedom 
in the nineteenth century, for a place in the tents of 
Abraham or in the caves of the Cyclops. There is noth- 
ing to be said in argument with such persons. Man 
cannot choose his birthplace or his birthright. It only 
remains for him to make the best of the fortune which 
falls to him. If there is anywhere at the present time 
any man so friendless and poverty stricken and unfor- 



50 The Labor - Value Fallacy. 

tunate, that having the ability he can find no opportun- 
ity to earn his bread, it is truly pitiful. But it is a case 
for pity, not for wrath against the institutions of 
society. 

Inequality in the conditions of men has not been 
removed by the development of individual liberty. It 
has been rearranged, on what we are bound to believe 
a juster basis. The inequality in social conditions is 
possibly greater to-day than in the most brutal days of 
slavery and serfdom. But to say this is not to condemn 
society. 

The appeal to nature is the favorite recourse of 
modern advocates of the right of the laborer to the 
product of his labor. I can produce many instances of 
this appeal, but I will content myself with two or three 
quotations from Henry George's book, " Progress and 
Poverty." 

" Thus there is to everything produced by human 
exertion a clear and indisputable title to exclusive pos- 
session and enjoyment which is perfectly consistent 
with justice, as it descends from the original producer 
in whom it is vested by natural law." 

" Hence as nature gives only to labor, the exertion 
of labor in production is the only title to exclusive pos- 
session." 

" It is a strange and unnatural thing that men who 
wish to labor in order to satisfy their wants cannot find 
the opportunity." 



Nature and Natural Laiv. 51 

There are many more, but these are sufficient to 
show the character of the appeal. 

I do not know exactly what is Mr. George's concep- 
tion of nature and of natural law, but it is evidently a 
work of the imagination, and not at all founded on fact. 
The philosophers of the last century amused them- 
selves and their sentimental admirers by describing 
man in a state of nature. By this they meant a sort of 
idyllic paradise, where imaginary beings, endowed with 
imaginary attributes, conducted themselves according 
to an imaginary set of rules, which they were pleased 
to call perfect justice or natural law. If Mr. George 
refers to these well known fairy tales, his reference is 
intelligible and consistent, but it hardly furnishes a se- 
rious foundation for an argument. 

But if Mr. George means by nature "the veritable 
system of things of which we ourselves are a part," or 
by natural law, that unchanging law by which all things 
exist, and in accordance with which we live and move 
and have our being, he is speaking without sufficient 
consideration. The law of gravitation and the law of 
the impenetrability of matter are natural laws. Mr. 
George is surely very hasty, if he means that the title 
to property is vested in the original producer by a law 
of this kind. Natural laws are invariable. There are 
no exceptions to their operations. But there is no evi- 
dence that it has ever been recognized that any title to 
the product was created by labor. That can hardly be 
a natural law to which all human action furnishes a 
continual exception. As there is no title by labor 



52 The Labor - Value Fallacy. 

known in fact, it is obvious that if nature means the 
system of things as they are, nature has ordained no 
such title. 

There is another sense in which the word nature is 
often used. In this sense it is contrasted with art, and 
is applied to that condition of things, which the art of 
man has not modified or changed. In this sense na- 
ture can hardly grant any title to the laborer, for as 
soon as man has exerted his efforts upon a natural ob- 
ject, it ceases to be in the domain of nature. 

Mr. J. S. Mill regretted that Plato had not left to 
posterity a Socratic dialogue " On Nature," so that the 
precise definitions of this term might have been handed 
down through the centuries and much confusion of 
thought, probably, thereby prevented. To meet this 
long felt want, Mr. Mill gave us his chapter on " Na- 
ture," as an introduction to his " Essays on Religion." 
The careful perusal of this chapter would, I think, effec- 
tually deter his followers from claiming that the laborer 
has acquired any title from nature to the product of 
his labor. Mr. Mill recognizes as the only proper uses 
of the word those which I have given above. First, 
nature as including man and all things as they are, and 
second, nature as including all those things which the 
art of man has not modified or changed. In the first 
sense, it is absurd to say that anything is according to 
nature which is not an invariable fact. It is then only 
in the second sense that it can be claimed that nature 
gives to the laborer a title to the product of his labor. 

But it is contrary to experience and observation, that 



Title to Property among Savages. 53 

such title is conferred by nature. To determine what 
nature does we must observe man uninfluenced by art. 
But the only men in a state of nature, of whom we have 
any knowledge are savages. If nature gives to the 
laborer the product of his labor, we should find a nat- 
ural instinct to this effect in the breast of the most un- 
tutored savage. I am ready to admit, that my oppor- 
tunities for observing untutored savages have been 
few, but I think that the eminent political economists 
and socialists have not been more favored in this res- 
pect. I have not found in the writings of any of them 
any attempt to cite examples of this instinct in savages. 
On the contrary, I have read many descriptions of the 
habits of savages, by well known travelers, and I have 
never yet found any suggestion that any savage, even 
the very lowest, had a sense of acquiring right to prop- 
erty by the labor of production. Among savages the 
ownership of property seems to be determined solely 
by the ability to retain control of it. The natural in- 
stinct of man is to possess himself if he can of those 
things which will satisfy his wants. Of this there is 
abundant proof. The untutored savage takes what- 
ever he sees, that he wants, if some stronger power than 
his does not prevent him, and never thinks whose labor 
has produced it. 

Does any man doubtthis ? Can there be any other 
conclusion reached by calmly considering this question? 
What possible justification then is there for the appeals 
to nature which are so liberally uttered by Mr. George, 
and his followers ? Where can the slightest evidence 



54 The Labor - Value Fallacy. 

be found that nature has vested the title to any prop- 
erty in the laborer who produced it ? 

Perhaps it is well, in order to account for the many 
confident appeals to nature which are made by Mr. 
George, as well as by abler men and more consistent 
reasoners, to refer once more to Mr. Mill's essay. He 
there describes a use of the word nature, which is a 
survival of those superstitious times, in which all the 
attempts of men to interfere with the action of natural 
forces were regarded as impiou,s. There are probably 
some ignorant persons, even now, who look upon light- 
ening rods and preventives of diseases as irreverent 
challenges of the wisdom of Providence. By a confu- 
sion of ideas, with such persons, nature comes to mean 
the designs of Providence, and also such an ordering 
of the affairs of this world, as they think ought to be. 
The appeal to nature thus becomes merely an assertion 
of their own opinions ; those actions which they ap- 
prove being according to nature, and those which they 
disapprove unnatural. This is a common use of the 
word, and will be found frequently in the speech and 
writings of men whose ideas are vague, but who wish 
to express themselves emphatically. The appeal to 
nature, to establish the title of the laborer to the pro- 
duct of his labor thus resolves itself into a mere beg- 
ging of the question. The socialist in effect says, such 
a title ought to be because it ought to be. This is the 
whole of his argument from nature. 

It is according to our observation of nature, that 
mothers love and protect their offspring, and we are 



Nature does not protect the Laborer. 55 

correct in saying that she is an unnatural mother, who 
neglects or destroys her child. But it is not according 
to our observation and experience, that opportunities 
are uniformly provided by any natural agency for men 
to satisfy their wants by labor. Nature produces with 
entire disregard to the wants of man; she takes no 
pains to satisfy his wants. She is careless whether he 
is starved or surfeited or poisoned by that which she 
produces. The opportunities which he enjoys to sat- 
isfy his wants by labor must be and always have been 
contrived by his own intelligence. If his intelligence 
can not contrive the opportunity, nature lets him perish. 
It is not according to experience that nature loves and 
protects the laborer. She is deaf to his desires and 
blind to his efforts. She destroys the product of indus- 
try and the most industrious laborer also, and has no 
remorse. 

In one sense nature is the rich but blind enemy of 
man. All that he possesses he seizes from her, and he 
is always in danger from her heedless blows. Through 
the knowledge of nature, acquired with infinite inge- 
nuity and handed down and augmented from genera- 
tion to generation, men have constructed an elaborate 
structure of art. It is art which enables man to elude 
the destructive strokes of the sightless giant nature, 
and it is art which teaches him to snatch her products 
and adapt them to his ever developing wants. Art is 
the work of man. It is unnatural for it is in one sense 
opposed to nature. It is artificial. But it is not un- 
natural in the same sense as is a mother's cruelty to her 



56 The Labor -Value Fallacy. 

child. The right of property is unnatural in this sense 
alone because it is artificial. It is a part of that slowly 
developed system of art, by which man has grasped 
the products and powers of nature and caused them to 
satisfy his wants. 

Nature seems totally oblivious that man has any title 
whatever to property. She takes possessions from one 
and destroys them, or confers them upon others, with- 
out rule or reason. In a state of nature there is no 
property right, unless the control which the wild beast 
exercises over his lair and his prey maybe dignified by 
that name. The whole idea of title to property, it 
seems to me, is the creation of art. We can not peer 
back into the primaeval gloom to detect its earliest 
suggestion. But look where we may, we find no rec- 
ognition of it in nature. 

It is probable, therefore, that man invented property 
right as he invented the so-called division of labor, to 
enable him the better to contend with nature. And when 
he found that the idea of right of property encouraged 
production, and helped to satisfy more of his wants he 
defined it more clearly and gave it greater respect. And 
this, I think, may describe the whole process. It has 
not been one uninterrupted series of improvements. 
Not every change has been beneficial. But the whole 
development has been greatly for the advantage of so- 
ciety, and he is little better than a madman, who would 
destroy the growth of centuries because he is not satis- 
fied. 

Through the whole development of the right of prop- 



Christianity and Socialism. 57 

erty, it does not appear, as I have already endeavored 
to show, that the title of the laborer to the product of 
his labor has been thought worthy of practical consid- 
eration. It is entirely opposed to the whole spirit of 
this development, and it can not be adopted now with- 
out subverting and destroying the artificial fabric of 
civilization. 

Deprived of the appeal to history, to custom or to 
nature, it maybe that the socialists will turn to religion 
for a justification of the laborer's title to the product of 
his labor. I do not think that socialists have at any 
time been remarkable for religious professions or prac- 
tices. On the contrary, I think that socialism is com- 
monly associated with the most sacrilegous opinions. 
But there are some, who like Henry George, are not 
too conscientious to quote a mangled verse of scripture, 
now and then, if it seems to them that they can thereby 
make a point. And there are multitudes of well mean- 
ing people, who have a decent respect for the words of 
the Bible, who are influenced thereby. There are, 
moreover, a great many teachers and preachers of 
Christianity, who reason loosely, and whose sympathies, 
being with the poor, are ready to take the view of 
society which seems popular, and encourage the belief 
that somehow the laborers have been unjustly deprived 
by the rich of the products of their labors. I do not 
say, that the doctrine, that the title to the product of 
labor ought to vest in the laborer, is definitely taught 
from Christian pulpits. I do not think, that Christian 



58 The Labor - Value Fallacy. 

ministers often reason sufficiently closely on such mat- 
ters, to arrive at such precise conclusions. But I have 
heard many expressions from such sources which tend 
in that direction, and which show that current 
discussion is shaping the minds of religious people to 
accept this belief. 

It seems to me, however, that this doctrine is as 
opposed to the spirit of Christianity, as it is to existing 
law and order. The teaching of the Old Testament is 
that all property is the gift of God, and the man who 
serves God is encouraged to expect prosperity. Loss 
of property is represented to be a trial of man's faith, 
as in the case of Job, and steadfast faith in God is re- 
warded by a restoration of his property greatly 
increased. When the children of Israel sinned against 
Jehovah, they were punished by loss of property and 
other calamities. When they obeyed the commands of 
Jehovah, the property of their enemies was given to 
them. Nowhere in the Bible is there any suggestion, 
that man acquires by labor a just title to the product 
of his labor, such a suggestion would be not only 
foreign to, but destructive of the teaching of the Bible. 
" The Lord gave, and the Lord hath taken away; 
blessed be the name of the Lord." This seems to be 
the epitome of the doctrine of the Bible concerning 
property. 

The New Testament and Christianity built upon 
this foundation but did not change it. The spirit of 
Christ's life and teaching was self-renunciation not 
self-assertion. There is something better worth work- 



Christian Doctrine. 59 

ing for than the accumulation of property. He said, 
" Labor not for the meat which perisheth, but for 
that meat which endureth unto everlasting life, which 
the son of man shall give unto you." He taught, that 
under certain circumstances it was the duty of a rich 
man to sell all that he had and distribute to the poor; 
but this sacrifice was to be made for the rich man's own 
benefit. He was thereby to acquire "treasure in 
Heaven." The poor were not taught by him to 
demand gifts from the rich. Such demands would be 
hostile to his teachings. 

In the time of Jesus Christ the political and econom- 
ic affairs of men were in a deplorable condition. 
They were in much worse condition than similar affairs 
at the present time. I suppose the most hardened 
socialist will not deny this. There was little protection 
for life or property, and fraud and dishonor and name- 
less crimes were too common to be noticed. This was 
especially true of Herod's Kingdom, and of the 
provinces into which it was divided. There was hardly 
any social order. Government was only the forcible 
execution of military commands, and bloody factious 
fights rendered it continually uncertain who were the 
government. A very considerable portion of the men 
of Palestine were openly robbers, and the multitude of 
publicans or tax-farmers were little better. There was 
no such thing as justice. The rights of men, if any one 
had thought of them, would have seemed utterly 
absurd. The Romans were the masters of the world, 
and the favorites of the Roman Emperor went every- 



60 The Labor - Value Fallacy. 

where, seizing whatever pleased them, punishing all 
resistance to their pleasures with scourging and torture 
and cruel deaths, and spending their plunder in brutal, 
vicious and lavish luxury. 

Surely then, if ever, a divine revelation of the right 
of the laborer to the product of his labor would have 
been appropriate. Surely then, if ever, divine encour- 
agement to rise and assert its rights, was needed by 
down-trodden and demoralized humanity. But such 
was not the burden of the divine message. The Christ 
had nothing to say of the rights of man ; he passed in 
silence the laborers who had no title to the products of 
their labors, he even advised peaceful submission to 
the foreign military tyrants who ruled his countrymen. 
He suffered himself without complaint the undeserved 
punishment of scourging, and bore without revolt or 
remonstrance, having broken no law and done no 
wrong, the most manifest injustice, — the ignominious 
death by crucifixion. 

The divine message in that den of thieves, which 
the world then was, was not resistance to oppression, 
but, " Love your enemies, do good to them which hate 
you," etc. If we can imagine a country peopled solely 
by such men and women as now fill our prisons and 
occupy the attention of our police, we would probably 
not conceive a state of affairs so bad, as existed in Pal- 
estine about the year 30 A. D. To such a community 
the divine word was preached, " Unto him that smiteth 
thee on the one cheek, offer also the other." It was, 
indeed, light shining in darkness. 



Equality and Christianity. 61 

This I think is the spirit of Christ's teaching, and 
of true Christianity, at least so far as the question of 
the laborer's title to the product of his labor is con- 
cerned. If he were entitled to this product, the spirit 
of Christianity would prevent the assertion of such 
title. 

I have been at a loss to discover how such ideas as 
the following are obtained from the teachings of 
Christ. 

Dr. Geike, in his " Life of Christ," says the seminal 
principle of Christianity is "the realization of the truth 
that the whole human race are essentially equal in their 
faculties, nature and inalienable rights." 

This iSj I think, a fair example of similar express- 
ions which occur often in the writings of eminent ex- 
pounders of religion. I give it here, because it is the 
latest of such expressions which I have noted. It seems 
to me not only an error but an error which can only be 
explained by a confusion of ideas. Christ taught that 
each individual is the object of his Heavenly Father's 
love, and when any individual labors and is " heavy 
laden," he may find rest in his love. He taught that 
all men are children of the Heavenly Father. But I 
do not recall any expression which can be construed to 
mean that they are equal in any other respect. Saying 
that all men are children of God does not imply other 
equality among them. 

Indeed I think the introduction of this claim of 
equality, as a fundamental doctrine of Christianity, is. 



62 The Labor -Value Fallacy. 

a grave mistake and not authorized by the words of the 
Bible. I think it also a dangerous heresy, subversive 
of the real spirit of Christianity. Men are not equal 
in fact in their faculties. Men are all embraced in 
human nature. They are all parts of nature in gen- 
eral. It is a confusion of ideas to say they are equal 
in nature. It is a form of words which has no precise 
meaning. Whether men are equal in their inalienable 
rights depends upon the organization of the society in 
which they live. Men have no rights outside of soci- 
ety. To say then, as Dr. Geike does, that " the whole 
human race are essentially equal in their faculties, 
nature and inalienable rights," is the seminal principle 
of Christianity, is to say that Christianity is founded 
upon a proposition which is either untrue, vague or 
variable, as you regard it in each of its threefold divis- 
ions. It is moreover a proposition calculated to pro- 
duce discontent in the minds of men, against society. 
This Christ never did. His teaching was directed to 
making the individual discontented with himself on 
account of his own sinfulness. This kind of discon- 
tent may be beneficial, for it may produce regeneration. 

The new view of religion which mankind gained from 
Christ was the special importance of the attitude of 
the individual toward God. Before his time the fam- 
ily, the tribe or the nation was supposed responsible 
for the religious behavior of its members. Christ 
taught that God looks into the heart of man to judge 
him. From this new view sprang the increased import- 



Christianity and Emancipation. 63 

ance of the individual in other relations of life, and, 
although its influence may not be directly traced in the 
development of individual right of property, it may 
nevertheless have been felt there. And this new view of 
each man's personal responsibility to God for his doings 
may have aided in working out the economic conclu- 
sion, that man is a more productive member of soci- 
ity, if he is politically a freeman. The connection of 
the teachings of Christ with this modern belief is not 
close. It requires some pious blindness to overlook 
the christian slave-makers and slave-holders of eighteen 
centuries, and to attribute to the spirit of Christianity 
the emancipations of the nineteenth century. Yet there 
is a connection. It may be that the advances of the 
individual in many directions are kindred developments 
of upward reaching man, and that all are but parts of 
and stages in the whole harmonious growth. 

Competition is the result of emancipation. This 
Christianity encourages, as it teaches the responsibility 
of the individual ; and it harmonizes with the modern 
ideas, that individual freedom of action and individual 
freedom in acquiring and controlling property, produce 
the noblest forms of personal and social life. The 
full recognition of individual responsibility involves 
the keenest competition. 

But Christianity adds to its commandment, " Thou 
shalt love the Lord with all thy heart," by which is 
inculcated man's individual responsibility to God, this 
second commandment which is like unto it in import- 
ance, " Thou shalt love thy neighbor as thyself." 



64 The Labor- Value Fallacy. 

That is, if I may give these teachings a modern form, 
competition should be tempered with charity. " On 
these two commandments " Christ said, " hang all the 
law and the prophets." On the proper observance of 
these two principles at the present day seems to depend 
the maintenance and improvement of modern civiliza- 
tion. 

It may be seen that I have gone too far in tracing a 
connection between the Christian doctrine of the respons- 
ibility of the individual to God, and individual com- 
petition. As I have already said, the connection is not 
close. It is not at all necessary to my argument that 
it should be admitted at all. I have only introduced 
it here as a suggestion of the harmony which may be 
established between the Christian religion and the work 
ing of economic laws, and to hint how the best results of 
competition are obtained, when it is modified by charity. 

I think this consideration may also suggest the fun- 
damental antagonisms between Christianity and social- 
ism. As far as I have been able to observe all social- 
ists are anti-christian. I think this irreconcilable dif- 
ference lies in the Christian teaching of the responsi- 
bility of the individual to God, and in the fact that 
Christian charity is essentially voluntary and not com- 
pulsory. 



The Desire to Relieve Misery. 65 



My argument would probably seem unsatisfactory to 
most readers, if I should leave it at this point. I think 
I have shown conclusively, that value is not created by 
labor, and that although labor may have been expended 
in producing many of the articles to which we attach 
value, there is no traceable relation between the labor 
and the value, which can justify us in saying that the 
labor creates or determines the value. In proving this 
I have also shown that there is no warrant for the claim 
that all wealth is produced by labor. And I think I 
have also made it clear, that the assumption that the 
just title to the product of labor vests in the laborer, 
rests on no basis which is worthy of respect. If I 
have done this so successfully, that any one reading 
what I have written, with ordinary attention, is con- 
vinced, I have destroyed the foundations of socialism. 
This is what I hoped to do, but I am conscious that 
socialist notions and half-beliefs are so common, even 
among men who fear and abhor socialist practices, that 
the destruction of the ground work of socialism must 
leave vacancies in many minds, and I wish, if possible, 
to provide some sound doctrine to take the place of 
those erroneous beliefs, which I have tried to destroy. 

There is a great deal of misery in civilized commu- 
nities, and human nature is so constituted that the 
knowledge of suffering causes pain, and begets an 
impatient desire to relieve misery and remove its cause. 
The first impulse which every one feels at the sight of 



66 The Labor - Value Fallacy. 

suffering is that it has been caused by some human 
agency, and that some wrong has been committed. If 
a ship founders at sea, we hasten to accuse the owners 
or officers of criminal negligence. If a passenger 
train leaves the rails and a hundred lives are lost in its 
debris, we blindly rage against all the servants of the 
railroad company, from the brakemen to the orna- 
mental directors. 

The desire to punish some wrong-doer follows almost 
immediately in most minds the perception of misery. 
Human nature seems to demand a victim in whose per- 
son suffering shall be expiated. And this demand is 
often unreasoning and even passionate. Among sav- 
ages it provides bloody human sacrifices to gods. 
It once led men to burn innocent and harmless old 
women, as witches. Among more civilized men it devel- 
opes itself in various phases, from the shooting of land- 
lords in Ireland, to the execration of railroad kings in 
America. 

It is this human disposition to find a wrong at the 
bottom of all suffering, which opens the minds of men 
to admit the labor-value fallacy. The lowest classes in 
all civilized communities suffer more or less. There are 
very many men, women and children, in the large cities 
of Europe and America, who frequently cannot obtain 
food, clothing and shelter, when they need them. 
These bear emaciated, frost-bitten bodies, the easy prey 
to diseases, and some of them sometimes die in cir- 
cumstances of heart-rending wretchedness. The well- 
fed, comfortably housed man turns away from such 



The Argument from Miseiy. 67 

sights, and would gladly be without the knowledge 
that such things exist, but somehow he cannot escape 
the feeling that such things ought to be prevented. 
And when the socialist agitator draws the startling con- 
trast, between the condition of the starving, fever 
pinched wretch, and the luxurious millionaire, living 
perhaps within a stone's throw of each other, we are 
apt to imagine that somehow the latter is accountable 
for the misery of his human brother. Let the social- 
ist tell of the hardships of the brakeman who in dark- 
ness and storm performs his perilous duty on the top 
of the rumbling freight train, and then let him picture 
the brave man crushed in a great collision, and with his 
last breath expressing the fear that his wife and child 
will come to want. Let this story be continued, and 
show how the child dies from starvation, and the wife 
drowns herself to escape a worse fate, and then let 
the socialist describe the comfortable home and luxu- 
rious life of the president of the rail-road, whose prop- 
erty has been benefitted by the brakeman's labor. Let 
him then in eloquent and impassioned words assert that 
a great injustice has been done, that the brakeman and 
his family have been wronged, and that the rail-road 
president has profited by the wrong, and that it is a 
vicious organization of society which permits the pres- 
ident to enjoy his wealth, while the brakeman and his 
family perish. Then the socialist may conclude tri- 
umphantly, and nine out of ten men will be led by 
their aroused sympathies to agree with him, that as all 



68 The Labor -Value Fallacy. 

wealth is created by labor, justice can never be secured 
until all property is vested in the laborers. 

It requires calm consideration to perceive that the 
unfortunates who exist everywhere, have no just com- 
plaint against society, and very likely have not suffered 
wrong from any one. But calm consideration cannot 
fail to bring unprejudiced minds to this conclusion. 
The fact of coming into the world gives no individual 
a right to food, clothes and shelter, but human love 
and sympathy give these as favors, almost always, 
while the individual is unable by reason of weakness 
or lack of skill to secure them for himself. But if the 
individual having sufficient strength and skill makes no 
effort to acquire those things which he needs, love and 
sympathy will probably cease to provide them. 

However much benevolently disposed people may 
wish that all men may be comfortably provided with 
food and clothes and shelter, it is impossible that this 
can ever be. These must always remain the rewards 
of well directed exertion, and there must always be 
some who fail to make the exertions, or whose exer- 
tions are not well directed. There must always be, as 
there always have been, some to whom daily bread does 
not come day by day, and some of these unfed mortals 
must be overlooked by the most vigilant benevolence. 
But for the failures of the unfortunates, or for the over- 
sights of benevolence, neither society nor its prosperous 
members are to be blamed. 

Society is a highly organized and complicated sys- 
tem, differing in its form and development in different 



The Organization of Society. 69 

places and for different peoples. The principles on 
which various forms of society are based, may at one 
time have been mere arbitrary rules. If so they have 
become crystalized into immemorial customs, and have 
been approved by the ages of progress toward the gen- 
eral advantage of the members of society. There have 
been steps in this progress. There have been at some- 
times slow changes, at others rapid advances, at others 
retrograde movements, at others stagnant hesitation. 
But if the best state of man is that in which knowledge is 
most widely diffused, freedom of action most untram- 
meled, and the most divers wants are most completely 
satisfied, the society of the present day, as represented 
in our own country, and in some of the states of Europe, 
has reached the highest development ever known. 

There are many persons of, I think, envious dispo- 
sitions, to whom inequality in the condition of individ- 
uals seems a greater hardship than general deprivation. 
Such persons are disposed to lament the changes which 
have been made in the last hundred years. They say 
that industrial and commercial activity has made the 
rich, richer, and the poor, poorer. That political 
enfranchisement of the workingmen has not checked 
this growing inequality. That one hundred years ago 
employers and employed worked together, and were on 
terms of friendly intercourse. But, to-day, the employer 
knows no more of his workmen than their ability to com- 
plete their tasks. He would as soon make companions 
of his machines as of those to whom he pays wages. 
This may be true in a degree. It is undoubtedly the 



70 The Labor - Value Fallacy. 

tendency of the organization of industry to draw mas- 
ter and men apart. The most successful manufacturer, 
or merchant, is he who carries on his business on a 
large scale, pushing the division of labor to the limit 
of economy. The manager of such a business is likely 
to regard his laborers as parts of a great machine, and 
to have little feeling of companionship with them. If 
this is an evil, it is one which is made necessary by 
active competition. The most successful manager is 
likely to have this characteristic most highly developed. 

But is this anything more than an imaginary evil ? 
Can no amount of increase in the comfort of his life 
compensate the workman for losing the society of his 
boss ? If the master has gradually drawn away from 
intercourse with his men, the men have gradually 
gained in the increased purchasing power of their 
wages. Of this there is no doubt. Workmen now 
wear better clothes, eat better food, and enjoy luxuries 
which one hundred years ago were not within the reach 
of the most opulent. What matter if the social scale 
has been lengthened ? Should it not satisfy the critic 
of progress, if allhave been raised to higher planes of 
consumption ? . 

But there is another consideration, which I do not 
remember to have seen noticed, and which seems to 
me of vast importance. About seventy years ago, 
Malthus predicted great evils for England, when the 
products of its soil would no longer fqed its popula- 
tion. But the population of England has increased 
far past that point, and the general prosperity of the 



Influences of Competition. 71 

country is said to be greater than ever. The support 
of this increased population has been furnished by the 
organization of industry and commerce, effected by 
competition. This, as a factor in the food problem, 
Malthus did not take account of. But it has changed 
all the conditions of life of the people of England. 
The English workman of to-day has very different sur- 
roundings from those of his predecessor in the time of 
Malthus. He may not now have so much country to 
roam in. He may not be able to keep a cow or have 
a patch of ground in which to grow a few roots. But 
he is equally well-fed, well housed and well clothed, 
and moreover there are twice as many of him. This 
is the point which generally escapes remark. The 
whole case is not by any means presented, when the 
individual of to-day is compared with the individual of 
fifty or one hundred years ago. There are twice as 
many human beings living comfortably in England to- 
day as were there when Malthus thought that popula- 
tion was already pressing upon the limits of subsist- 
ence. Is this an evil or a good ? We would call it a 
great calamity if war, pestilence or famine should 
destroy every other inhabitant of a country. Ought 
not then that to be reckoned a great blessing which 
doubles population, and sustains the increase as well 
as the smaller population was previously maintained ? 
Competition has done this. The stimulus to individual 
exertion afforded by laws which protect each man in 
the enjoyment of property acquired in conformity to 
law, by laws which enforce contracts and give to men- 



72 The Labor - Value Fallacy. 

tal exertion a greater advantage than it ever before 
enjoyed over physical labor, has enabled millions to 
keep soul and body together, and to feel more or less 
of the joy of existence, who never would have visited 
these glimpses of the moon at all if the "good old 
times " had continued. 

Do those reformers who look regretfully into the 
past, and assert that the life of the English laborer, as 
pictured by De Foe, was preferable to the life of the 
English workman of the present, ever reckon the mul- 
tiplication of human life a blessing ? Speaking in the 
interest of the poorer classes, as they professedly do, 
do they realize what a return to the habits and mode 
of living of the time of De Foe would involve ? It 
would involve the crushing out of the lives of millions. 
Every turn of the wheel backward toward those condi- 
tions under which the workman and their employers 
lived and worked together would exterminate millions. 
The most wretched, the lowest in the scale of self- 
support, those whom the socialists profess to be most 
anxious to benefit, would go first. But before the 
imagined comfort of the laborer of De Foe could be 
restored, — the common cow pasture and the vegetable 
patch, — vast masses of population to whom the com- 
petitive system furnishes easily, food and raiment, 
would find the means of existence cut off and would 
perish miserably. 

" The bitter cry of outcast London," of which we 
have heard something lately, is not less bitter because 
it is not peculiar to our time. The wailing of the suf- 



Improved Condition of Laborers. ?3 

fering has gone up from the comfortless dens of all 
large cities since men devised metropolitan life. It is 
the desire of every man of human impulses to miti- 
gate, or if possible relieve wholly this misery. But 
every right minded man can see this can never be 
wholly accomplished. If any one compares the condi- 
tion of the abject poor of London, as described in 
recent newspaper articles, with the condition of English 
laborers during and previous to the last century, as 
described by Fielding, Defoe, Macauley and others, he 
cannot avoid the conclusion that the very outcasts are 
now better provided for than were once the common 
workingmen. There is a certain advance from the 
chimney-less, window-less hut, whose floor was the bare 
ground covered with rushes and accumulated filth, to 
even the worst single-room tenement of the present 
London slums. And even the repulsive bed and bed- 
stead in the vilest furnished lodgings of this day are 
better than the dirty straw and the wooden pillow, 
which were once the best couch that English laborers 
hoped for. This comparison should not cause us to 
pity less the wretched outcasts of to-day, but it should 
prevent us from rising in rage and cursing the organi- 
zation of society. Whatever has been done to raise the 
conditions of human life has been done by society. 
That wretchedness and poverty remain, perhaps as 
keenly felt as ever, is due to an ineradicable character- 
istic of human nature. The art of man, working in 
the form of social organization, may multiply com- 
forts, may make it possible for two human beings to 



74 The Labor - Value Fallacy. 

obtain subsistence where one could with difficulty 
secure it before, but it cannot abolish poverty or an- 
nihilate wretchedness. Poverty and wretchedness are 
relative facts. They imply contrasting affluence and 
contentment, and while individuals are created under 
differing conditions and are endowed with differing 
faculties, this contrast must exist. What would have 
been affluence several centuries ago is accounted pov- 
erty to-day. 

The Malay enjoys a bodily comfort, beside which 
the frozen existence of the Esquimaux seems poverty, 
but, as neither knows of the life of the other, the one 
feels no self-satisfaction, the other no envy. But the 
life of a large city brings these opposite conditions in 
juxtaposition. Art produces for the rich the equable 
temperature, the delicate fruits, the delight of flowers 
and tropical foliage, which the Malay enjoys, side be- 
side with dark, cold and cheerless dens in which the 
poor greedily appease the cravings of hunger with 
food as nauseous as that of the Esquimaux. This con- 
trast serves to exhibit the reality of affluence and pov- 
erty. It developes exultation and pride on the one 
hand, the grinding torments of envy on the other. 

There is opportunity for a very long and comprehen- 
sive essay on the causes which produce inequalities in 
the material circumstances of individual lives. The 
tendency of historical research at the present time is to 
find out and identify these causes The efforts to learn 
the thoughts, habits and conditions of people, and by 



The Labor -Perceiving Faculty. 75 

these to explain developments of national traits and 
events in national progress are the manifestations of 
this tendency. I have not the time or space here, nor 
indeed have I the learning or ability to go into this 
subject at length, nor does my present subject demand 
it. But it seems to me that a voluminous collection of 
historical data might be made to show that the wealth 
accumulating faculty has been developed in individuals 
and nations by a sort of natural selection. The differ- 
entiation of civilization has, as the naturalists would 
say, specialized the perception of value. Man as far 
as we know in his savage state had little or no percep- 
tion of value. When men began to trade they began 
to recognize value in exchange. An infant has no per- 
ception of this value. Savages and infants desire and 
attempt to possess themselves of whatever will satisfy 
their wants, but the complicated perception of what 
will satisfy the wants of others, and thus enable them 
by exchange more completely to satisfy their own far 
off wants, is beyond their powers. In this respect 
some human beings, even in civilized communities, re- 
main savages and infants all their lives. I think any 
of us can readily find, in our own neighborhoods, men 
and women in whom the perception of value is merely 
rudimentary. Such persons may be highly qualified 
in other ways, may in fact possess many amiable and 
admirable faculties, but lacking this they are compara- 
tively poorly equipped in the struggle for life* under 
present conditions. In this commercial, competitive 
age it is necessary that the value-perceiving individuals 



76 The Labor - Value Fallacy. 

_S- . 

should hold the chief social power, just as in ruder 
times those who possessed the fighting faculty dom- 
inated their fellowmen. The value - perceiving ge- 
niuses of our day do not depend for their authority 
upon the suffrages or the favor, but upon the needs of 
their fellow men, just as the best soldiers once acquired 
command by mere force of circumstances. We are all 
familiar with the process by which excellence in the 
perception of value asserts itself. There are well 
known stories in every family, in every social circle, in 
every village, in every community of how this or that 
individual, perhaps with most unpromising beginning, 
gradually developed this faculty, surpassed his asso- 
ciates, organized industry, managed trade, attained 
wealth, and became a pillar of society on which his 
friends lean, and to which his neighbors look with res- 
pectful admiration. And equally common are the sto- 
ries of failures and descents from prosperity to misery, 
by reason of the lack of this faculty. 

I do not wish to intimate that the value-perceiving 
faculty is the highest or most to be desired. I merely 
wish to suggest that in the present state of society, 
which I believe is the highest which man has ever at- 
tained, it is the faculty to which the greatest power 
attaches, and I think a very considerable benefit may 
accrue from the simple recognition of this fact. This 
removes at once all ground for the common feeling 
that the well to do members of society are accountable 
for the misfortunes and failures of the degenerating 
and incompetent. The rich, as a class, have no more 



Independent Poor Men. 77 

just responsibility for the misery of the poor than do 
the whole and healthy for the pains and infirmities of 
cripples and imbeciles. The attitude of the rich to the 
poor should be one of pity, but there should be no 
shade of remorse. The attitude of the poor to the rich 
should be one inviting compassion, but not demanding 
compensation for wrongs inflicted. Of course I mean 
by this only the abject poor, actually suffering for the 
necessities of life. I am prepared to maintain that a 
comparatively poor man may be, and should be, as 
happy and independent as any rich man, asking no fa- 
vors and confining his wants strictly within his re- 
sources. If any one has not the value-perceiving fac- 
ulty he can not acquire, and unless fortunate in his 
friends, can not retain wealth, but he can lead a con- 
tented and independent life by limiting his wants to 
his means. This is one of the most useful results of the 
recognition of this analysis of faculties. A great many 
beneficial members of society have not the value-per- 
ceiving faculty well developed. Artists, musicians, 
teachers, clergymen, skilled laborers and those who 
have no skill can not be expected to possess this fac- 
ulty in any considerable excellence. For all these, a 
great point has been gained, if they realize the exis- 
tence of the faculty and their own lack of it. They 
will then no more expect to be rich than to be phen- 
ominally strong or extraordinarily beautiful. There is 
a very common notion, that the acquisition of wealth 
is a matter of luck, and very many simple minded 
people are seduced by this notion to attempt to win 



78 The Labor -Value Fallacy. 

fortunes in various forms of gambling. But one may 
as well hope to add a cubit to his stature as to acquire 
permanent wealth in this way. It is notorious that the 
sudden acquisition of money or property by any one, 
not accustomed to its use and care, produces demorali- 
zation, and results in waste and ruin. It is as absolutely 
certain that the individual who has not possessed and 
cultivated the value-perceiving faculty, can not retain 
possession of a fortune, which may be thrown in his 
lap by chance, as it is that water poured out on a hill 
top will seek the water course in the valley. The great 
gains' in all forms of gambling go ultimately to the 
value-knowing manipulators of the games, and those, 
who are lacking in the value-perceiving faculty, and 
are eager to try their luck, furnish the wealth which the 
expert gamblers gather in. He is fortunate who cor- 
rectly estimates his own value-perceiving ability and is 
wise enough not to contend with those who are better 
endowed or better equipped than he. 

It is in his intellect that man differs from the beasts, 
and it is in intellect that one man differs from another, 
making as wide a difference between the highest and 
lowest man as between the lowest man and the highest 
beast. The value-perceiving faculty is highly developed 
in the highest intellect. He who has this faculty will 
accumulate wealth by comparatively slight exertion, 
while he who has it not will not gain wealth, no matter 
how energetically he labors. Races and families differ 
widely in respect to this faculy, but it is generally true, 
perhaps by natural selection, that the races and fami- 



The Value -Sense of the Jeivs. 79 

lies highest in general development and in prosperity, 
exhibit this faculty most largely. Other things being 
equal, he who has the keenest appreciation of art will 
paint best and will enjoy the best painting ; he who has 
the most delicate musical sense will secure the most per- 
fect musical instrument and will perform most satisfac- 
torily thereon. So he who is the best judge of value 
will make the best bargains, and will most rapidly ac- 
cumulate wealth. 

Mr. Matthew Arnold in " Literature and Dogma " 
elaborated a theory, that the Jews, the children of Is- 
rael, were " the people who had the sense of righteous- 
ness, most glowing and strongest," just as the Greeks 
had the sense of art, and the Romans the military spirit 
in greatest perfection. A similar theory might, I think, 
be worked out and illustrated by plentiful historical 
examples, to the effect that the sense of value has char- 
acterized the Jews even more particularly and persist- 
ently than the sense of righteousness. I think it can be 
shown to be reasonable that this sense of value, pos- 
sessed by the Jews in an unusual degree, has kept the 
race for centuries separate from others and distinct 
among other peoples. Without the military sense or 
spirit, with no country which they could call home, 
they have been distinguished from other men by their 
keen perception of value, and by this trait have pre- 
served their lineage and their identity through centu- 
ries of change and decay in other races. That the Jews 
have fairly inherited this faculty no one can doubt, 
who reads the story of Jacob. They are true children 



80 The Labor - Value Fallacy. 

of that Israel, who drove the sharp bargain for the 
birthright with the value-dull Esau, and placed the 
ring-streaked rods by the water-troughs of Laban's 
heifers. 

The best development of the value-appreciating 
faculty has passed beyond the mere bargain-driving 
stage, and the greatest commercial successes are 
achieved by the organization of industry and the 
systemization of methods. The true commercial spirit 
of modern times asks only a fair field and no favors, 
seeks only trade which benefits both buyer and seller, 
increases wealth by ingenious devices, by more 
economic transportation, by the use of banks and 
clearing-houses and boards of trade or exchange. It 
has contrived that the earth, or that portion of the 
earth to which its influence extends, sustains a hundred 
millions more human beings than the same countries 
could furnish food for fifty years ago. And all this, 
which the commercial spirit has accomplished, it alone 
can sustain. If the intelligent energy of this spirit is 
checked, if the well devised system of its operation is 
disordered, the abundance of its results, on which so 
much depends, will decrease. Each degree of this 
decrease will bring straitened circumstances to millions, 
hard times, difficulty in obtaining food, and in some 
cases absolute inability to sustain life. Surely such a 
prospect should warn us to oppose no discouragement 
to the commercial spirit. Yet this is exactly what social- 
ism demands of us. In their blindness and folly the 
socialists would take the management of property from 



The Improvement of Society. 81 

the hands in which the present organization of society 
has placed it, would have a redistribution of property, 
so that those who have had no experience in its man- 
agement, would hereafter manage it. They would re- 
construct the laws, so that those who possess the value- 
sense, the wealth accumulating faculty would no longer 
be able to enjoy any special reward for the exercise of 
their talent. They stupidly imagine, no doubt, that 
civilization will somehow continue to exist when the 
motive power has been destroyed. They fancy that 
somehow the hands which have been taught to labor, 
will continue laboring when the brains, which taught 
and directed them, are dead or torpid. But any such 
expectation is the most fatuous imbecility. 

While I maintain that all the demands of the social- 
ists are unwarranted, and that the least yielding to any 
of them will cause social damage, I am far from 
claiming that the social organization is now perfect. It 
is a wonderful development as it now exists, but I doubt 
not, that it is capable of greater development and im- 
provement. But its healthy and beneficial growth can 
only be in accordance with the principles which have 
brought it thus far. I do not doubt that, by wise 
measures and the diffusion of correct ideas of life, the 
comfort and happiness of all classes of men may be 
greatly improved. 

The improvement in the condition of those who 
labor with their hands, it seems to me is not to be 
brought about by the demands of labor societies, when 



The Labor -Value Fallacy 



such demands are based on the theory that labor 
creates value. (I believe that it is highly proper, and 
shows the possession of the value-perceiving faculty, for 
laborers to unite in trade-unions, for the purpose of 
securing the highest market price for their labor, — the 
commodity which they have to sell.) But the real hope 
of improving the laborer's condition is in the diffusion 
of the gentle spirit among all classes. This might be 
called culture, if that word had not acquired a certain 
priggish significance. It is not by loudly claiming 
what he supposes are his natural rights, that the laborer 
is to be benfitted, but by lending a hand in sustaining 
and advancing cizilization as he finds it. He must be 
the friend and not the enemy of society, if he would 
enjoy life. What matter if he finds himself somewhat 
low on the social scale ? If he rightly estimates his 
faculties and does his best to make them useful, there 
is a fair share of contentment for him. If instead of 
ruminating on the unaccountable circumstances, which 
have given to certain of his fellow men greater advan- 
tages and greater powers than he possesses, he 
endeavors to cultivate among those with whom he comes 
in contact, mutual respect and the recognition of the 
worth of individual character, he will be far happier. 
The substitution of efforts to deserve well, for efforts 
to secure all possible rights is an indication of the gen- 
tle spirit. 

In a state of nature, selfishness is uncontrolled. It 
is neither desirable nor possible to eliminate selfishness 
from man. It is an essential part of him. But the 



Selfishness. 83 



best results of civilization are gained by stimulating 
individual exertions by proper rewards, and modifying 
selfishness by proper self-restraints. Without selfish- 
ness man would have no force. But the selfishness of 
a well-trained man is to natural selfishness, as the ap- 
petite of a polite dinner-guest is to the hunger of a 
wild beast. The one satisfies its cravings decently and 
in order, and with due regard to the similar cravings 
of others, but the beast rends and devours and gorges 
himself, oblivious of all but his own satisfaction. The 
civilized man, whether he be laborer or manager, value- 
sharp trader or value-dull star-gazer, should not be 
devoid of selfishness, but should hold it like his pas- 
sions in firm control. He should do this for higher 
reasons than mere selfish wisdom suggests, yet pure 
selfishness, if it be intelligent, must approve this self- 
restraint, for by reason of it, when generally exercised, 
each individual secures most prolonged and fullest 
enjoyment. 

The pictures which socialist agitators draw of the 
lives of rich men, in order to induce laborers to cast 
aside all self-restraint and give their selfishness full 
rein, are commonly grossly untrue. But even if they 
were true, the argument based upon them is a gross 
fallacy. Suppose that rich men pass their lives in 
vicious excesses, what possible good can the laborer 
derive by meditating on this state of affairs, or by 
imitating it to the best of his ability ? The intent of 
this fallacy is to lodge in the minds of the laborers the 



84 The Labor -Value Fallacy. 

notion, that the wealth which they have somehow 
created is being spent in riotous living, and that the 
laborers ought to participate in this sort of enjoyment, 
which is supposed to attend this use of riches. The 
cunning of the fallacy lies in first inflaming the passions, 
or at least the prejudices of laboring men, by vicious 
descriptions, and then teaching them that these waste- 
ful excesses are indulged at their expense. No reason- 
ing could be more unsound. It is true that the con- 
duct of every member of society is a matter of interest 
to every other member. But this is a rule which applies 
to rich and poor alike. The rich man is as greatly 
injured by the poor man's debauchery, as is the poor 
man by the rich man's vice. The question of personal 
conduct is entirely removed from the question of 
property. 

But the socialist agitators carry their attempts to 
arouse prejudice in the minds of working men to a 
still more vicious extreme, and represent in certain 
cases the mere possession and enjoyment of riches a^ 
a wrong. The name of Vanderbilt is so commonly used 
as a synonym of great wealth, and the persecution and 
abuse heaped upon. Mr. Win. H. Vanderbilt and his 
family, by certain newspapers and would-be labor re- 
formers, is so well-known and so unrelenting, that I 
may be excused in using this name in an illustration.* 

* I wish to make it plain that I have used this name only by way of illus- 
trating my point clearly and with no intention of appearing as the champion 
of any individual. For Mr. Vanderbilt's name may be substituted that of any 
other law abiding citizen who possesses and manages property acquired in the 
development of American enterprises. 



Unfair Abuse of Rich Men. 85 

It is not charged that Mr. Vanderbilt's wealth has been 
acquired in an unlawful way, or that it is employed by 
him for unlawful purposes. It is not charged that he 
has robbed any man, or that any man is the poorer to- 
day by reason of his possessing millions. As far as is 
known, Mr. Vanderbilt and his family are respectable 
people, affectionate in their family relation and reason- 
ably courteous in their intercourse with friends and 
strangers. They have done nothing to attract public 
attention to themselves. They have not been overbear- 
ing or ostentatious, and have set no example of vicious 
or corrupt luxury. But it is known that Mr. Vander- 
bilt owns a large amount of stock in several important 
railroad companies, which probably afford him a larger 
income, than any other man in this country enjoys. On 
this account alone he is made to appear in a peculiar 
and unenviable light to a large part of the people of 
this country. His face is freely caricatured in all the 
comic papers. Almost every week he is depicted lead- 
ing a typical workman in chains, or is represented as a 
fierce dragon devouring helpless laborers with their 
wives and children. Newspaper correspondents vie 
with each other, in inventing unfavorable gossip about 
him and his surroundings, and leading articles daily 
denounce him without stint. In fact so far is this 
misrepresentation — this outrage upon private life and 
character carried, that I think a considerable part of 
the American public conceive of him as a sort of 
resurrected Nero or Caligula — a modern tyrant, gross 
and remorseless, levying cruel and unjust assessments 



Sfi The Labor - Value Fallacy. 

on the poverty-stricken people who travel on his rail- 
roads, smiling at the tears and groans of his victims, 
and muttering as he figures up his dividends, "the 
public be damned." 

The fact is, Mr. Vanderbilt is receiving a proportion- 
ately small, and a well earned part of the profits of 
the greatest economical device of modern times. Mr. 
Vanderbilt's father possessed extraordinary ability. 
He had the value-sense largely developed, and with it 
great energy and persistence. He organized and per- 
fected a great system of cheap transportation, which has 
brought immense wealth and prosperity to the people 
of this country. The results of the combinations which 
his genius effected are an unprecedented increase in the 
means of subsistence, an unparalleled multiplication of 
population. It is very likely that some of the reckless 
agitators, who are to-day denouncing the Vanderbilt 
family, owe the bread they eat to Commodore Vander- 
bilt's commercial genius. It may be said, that some 
one else would have consolidated the New York Cen- 
tral and Hudson River rail-roads, and extended its 
connections in the West, if Commodore Vanderbilt had 
not done so. This may or may not be probable. No 
one can tell. But if so, some other man's children 
would to-day be enjoying the Vanderbilt income. He 
who renders a great service to society is worthy of a 
great reward. Mr. W. H. Vanderbilt is to-day receiv- 
ing his just dues, under the contract which civilized 
society holds with all its members. This contract is 
the very corner-stone of all civilization. To injure or 



Republican Riches. 87 

destroy it is to turn mankind about and start the 
race on the downward road to barbarism. Even to 
question its importance argues ignorance and degen- 
eracy. 

Mr. Vanderbilt's large income is often spoken of as 
a monstrous injustice in a republic. This shows a sin- 
gular confusion of ideas, and that there are some per- 
sons who imagine that a republican form of govern- 
ment is somehow to cause an equal distribution of men- 
tal and physical powers to all its citizens. This is not, 
and never can be its function or object. The equal 
protection of every man in the exercise of his peculiar 
powers, is the object and glory of republican government. 
By this means each man is encouraged to use his pow- 
ers to the best advantage, and the results which he may 
be able to attain are guaranteed to him and to his chil- 
dren, according to their ability to retain them. Mr. 
Vanderbilt's large income should be regarded as an 
evidence of the grand opportunities afforded under 
well regulated popular governments. It should be an 
incentive to every citizen to be diligent in devising eco- 
nomic benefits for the public, that he and his children 
also may be rich and prosperous. 

While I am writing this a cable dispatch comes to 
the effect that Mr. Henry George has been received on 
arrival at the rail-road station, in London, by fifteen 
hundred persons, representing the Land Reform Union, 
and that he has made a speech. The telegraph repre- 
sents him as saying : 



88 The Labor -Value Fallacy. 

" Power must always be with the masses. Do not 
ask for patronage or charity, but demand justice — your 
own rights, and the rights of those below you. In this 
way we shall conquer." 

There is a great deal of very dangerous error in 
these few words, but the fifteen hundred people whom 
Mr. George addressed are probably doing their best to 
believe these errors, to propagate and to act on them. 
And in this fact lies the necessity of exposing these 
errors and refuting them, lest great social damage be 
done, lest multitudes suffer useless misery. 

The power which the masses possess is mere physical 
force. Without intelligent guidance it is no more than 
the power of so many beasts. And whether this power 
is to be exerted benevolently or malevolently depends 
on the wisdom with which it is directed. It must 
be manifest to every man, that this power misguided 
will do immense harm. If, then, the masses are led to 
believe that they suffer injustice, when no injus- 
tice is done them, or that they are denied some rights, 
when in fact they are enjoying all their possible rights, 
it must be admitted that they are grossly misguided, 
and are in danger of doing great mischief. The ques- 
tion then is, are the masses deprived of any just rights ? 
By the masses I suppose Mr. George means those per- 
sons who have little or no property, and are dependent 
on their daily earnings for their daily sustenence. To 
this question then the answer is plain. All men are 
equal before the law ; all men have equal rights. This 
is true to its fullest extent in this country. It is true 



Rights of the Masses. 89 

with but slight limitations in England. Those who 
compose the masses, and those who make up the 
remainder of society, have the same rights, and society 
guarantees and secures to each man, whether he be 
rich or poor, laborer or capitalist, the enjoyment of 
these rights. These rights are numerous and well 
defined. The right of personal liberty, and the right 
to acquire, possess and dispose of property, are per- 
haps the most important ; and it is the last and most 
carefully guarded triumph of civilization, that no dis- 
crimination is made against any man in respect to his 
rights, on account of his learning, his belief, his wealth 
or his position in the state. The laborer has now the 
same rights, no less and no more, which every other 
man possesses. Neither Mr. George nor any other 
man can truthfully deny this. What then does Mr. 
George mean, when he urges workingmen to demand 
their rights ? He can mean nothing else but that the 
masses have rights, which others, who are not the 
masses, do not possess. If he means this, he is lead- 
ing the masses to demand something more than their 
just rights. He is striving to direct the power, which 
is in the masses, to the upsetting of the benevolent 
development of society. He would have the masses 
destroy the organizations of industry and commerce, 
by removing the master minds who direct them. H.e 
would deprive mankind of all motive for exertion but 
the mere temporary desire for food and clothing. Any 
higher object, if attained, would lift an individual above 
the masses, and would work a deprivation of the sup- 



90 The Labor -Value Fallacy. 

posed rights, which he exhorts the masses to demand. 
The spirit of Mr. George's harangue is to discourage 
all effort but that which is merely physical, and to sub- 
stitute for the competition of intellect, a competition 
of idleness. Is this the proper intelligence to guide 
the power of the masses ? 

Mr. George has at various times indulged in a good 
deal of unpleasant rant about Mr. Wm. H. Vanderbilt 
and his so-called unearned wealth, but it has probably 
never occurred to him to make a comparative state- 
ment of the happiness and misery which he and the 
much abused millionaire are causing in their day and 
generation. Mr. George very likely counts himself 
something of a philanthropist, yet a truthful statement 
of this kind might surprise him. It is not necessary 
to give Mr. Vanderbilt credit for benevolent motives, 
or to take into account his active charities, if such 
there are. It is needful only to assume that he man- 
ages his large property on just business principles, and 
it is easy to see that he is constantly furnishing the 
means of living to a large number of men, and that he 
is instrumental in assisting a much larger number to 
acquire a portion of the comforts which they enjoy. 
But what have been the results of Mr. George's efforts? 
Has he ever conferred any material benefit on any con- 
siderable number of his fellow-men ? Has he not 
rather rendered a great many men discontented ? Is 
not the sum of human misery increased by the work 
which he has been engaged in ? Are not the fifteen 



Charity and Patronage. 91 

hundred workingmen of London worse members of 
society for the exhortations which he has addressed to 
them? If his words have been heeded, he has un- 
questionably rendered labor less cheerful and hence 
less efficient. Discontent among laborers causes 
slackening of exertion and waste in production. Can 
any one, who has given any attention to Mr. George's 
addresses to workingmen, doubt that they have re- 
tarded the wheels of industry in a thousand factories? 

Mr. George says to the workingmen of London, 
" Do not ask for patronage or charity." There is a 
tone of manly independence in these words which is 
very deceptive. No man should ask for charity except 
as the last resort. A proper spirit will lead a man to 
practice all possible economy and self-denial rather 
than ask charity. En this self-denial lies the manliness 
of not asking charity. But this is not the meaning of 
Mr. George. Self-denial and personal economy have 
no place in his teachings. He tells his followers not 
to ask patronage or charity. Now asking patronage is 
entirely different in character from asking charity. 
The only sense in which the word patronage is used in 
commercial affairs is as an equivalent for the favor of 
customers or employers, or favor in trade. It is nec- 
essary for success, in nearly if not quite all the modes 
by which men make their livings, that they should ask 
patronage. And he who is most apt at soliciting pat- 
ronage is, other things being equal, likely to secure 
the best living. The banker, the merchant, the physi- 



92 The Labor -Value Fallacy. 

eian, the lawyer, and even the clergyman have well 
known ways of asking patronage. The railroad com- 
pany and the manufacturer ask patronage most per- 
sistently and are not ashamed. Why should laborers 
bo too proud in spirit to ask the patronage of employ- 
ers ? The tradesman does not think it unmanly or 
humiliating to ask people, who have the means, to buy 
his goods. It might be more according to his taste to 
put out no sign, to make no display of his wares, but 
to wait for purchasers to find him as best they could. 
A shopkeeper who scorned to ask patronage, however, 
would have to content himself with small profits in 
these days of active competition. Yet this is the line 
of conduct which Air. George advises laborers to pur- 
sue. Having the commodity labor for sale, they should 
not ask for employment. They should stand proudly 
apart and wait until employers solicit them to labor. 
Is it anything unreasonable to say that the laborers, 
who follow Mr. George's advice, will be left behind in 
the race by the patronage-asking laborers ? The latter 
will find the best work and the best pay, and will enjoy 
prosperity, while Mr. George's misguided disciples, 
neglecting to ask patronage, but demanding more rights 
than other people, will remain floundering in poverty. 



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POLITICAL RECOLLECTIONS 

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THE THEORIES OF DARWIN 

And Their Relation to Philosophy, Religion, 
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Translated from the German of 

RUDOLF SCHMID, 

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